The term Ã¢â‚¬Ëœunderwater' has become common industry jargon in today's marketplace of depressed home values and high loan balances, and it's increasingly making its way into the everyday vocabulary of consumers.[IMAGE]
Twenty-six percent of mortgage borrowers now say they are underwater, meaning they believe they owe more on their mortgage than the home is worth, according to the results of a new survey conducted by ""Fannie Mae"":http://www.fanniemae.com this week. That's up from 23 percent who held that sentiment during the first quarter of this year.
The GSE says underwater borrowers are more anxious about their financial picture and outstanding debt, in particular, than other mortgage borrowers. Forty-two percent of underwater borrowers Fannie Mae survey say they are stressed about debt, compared to 31 percent of all mortgage borrowers.
Underwater borrowers are more likely to know someone who has defaulted on their mortgage. Fifty-seven percent of those underwater can identify someone who has defaulted versus 49 percent of mortgage borrowers and 43 percent of the general population, according to Fannie Mae's survey.
The GSE's study also found that the idea of being in negative equity, or underwater, is more prevalent among minorities.[COLUMN_BREAK]
Thirty-one percent of minority mortgage borrowers report being underwater compared to 23 percent of non-minority mortgage borrowers.
Fannie Mae notes that minority borrowers are more likely than non-minority mortgage holders to live in states with above-average levels of negative equity and are more likely to report lower family household incomes.
Two out of 3 respondents to the GSE's poll say they support mortgage modifications and believe such programs help protect the economy and local communities from increased foreclosures and falling home prices.
Beyond negative equity, job security remains a primary concern among mortgage borrowers.
Fannie Mae says 26 percent of American workers report being concerned about losing their job in the next twelve months. While 44 percent of concerned American workers report having a home mortgage, just 33 percent of them perceive their savings to be sufficient.
The GSE found that employed Americans concerned about job loss are more likely than all employed Americans to say it is a bad time to buy a home and they are more likely to say they would rent their next home.
""Consumers are more cautious due to concerns over employment and household finances,"" said Doug Duncan, VP and chief economist for Fannie Mae. ""As a result, consumer spending, which accounts for about 70 percent of the economy, ground to a halt in the second quarter.Ã¢â‚¬Â
Duncan continued, Ã¢â‚¬Å“Consumers are more hesitant to take on additional financial commitments, and a setback to confidence means a setback to the recovery of the housing market.""
Fannie MaeÃ¢â‚¬â„¢s poll showed that 64 percent of Americans surveyed in the second quarter believe the economy is on the wrong track, the most for any quarter since the inception of the survey in the first quarter of 2010.