Underwater Mortgages Continue to Trouble Housing Market

From 4% in 2006 to more than 23% in the first quarter of the current year, the steep increase in the number of ‘underwater’ mortgages has underscored the slowdown in the housing market.

After years of easy mortgage loans and soft terms of repayment led to thousands of Americans opting for these loans to buy homes, the downturn brought with it a dramatic decline in the market. A huge percentage of the borrowers who had taken advantage of easy terms ended up unable to pay back the loans and were forced to foreclose on their homes. [Read more…]

Mixed Reaction to Bank of America’s Debt Reduction Offer

Bank of America announced on Wednesday that it would start offering debt reduction for homeowners who have an underwater mortgage. However, the offer has got a mixed reaction from industry analysts.

Bank of America has said that it would reach out to homeowners who are struggling to keep up with their mortgage payments and are likely to see a foreclosure of their property if no help is offered. The offer would be valid only when the mortgage balance exceeds the value of the property by at least 20%. The bank would choose about 45,000 homeowners to whom it would extend the offer of reducing their debt by a maximum of 30% in the next few years. [Read more…]

Walking Away from Your Underwater Mortgage is Not the Solution

A large number of American homeowners now have an ‘underwater’ mortgage, which means that their home is valued lower than the remaining amount due on the mortgage. The problem has resulted from the massive declines in house prices throughout the country, by as much as a third in many places. [Read more…]