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Tag Archives: Negative Equity

U.S. Homes to Lose $1.7 Trillion in Value This Year: Report

According to analysis from the research firm Zillow, U.S. homes are expected to lose more than $1.7 trillion in value this year. Since the market peaked in June 2006, the company says homeowners have been stripped of $9 trillion in equity. To put things into perspective, Zillow cites a report by the Congressional Research Service, which says from 2001 to September 2010, the war in Iraq has cost the United States $750.8 billion. That means the value lost in residential property values since mid-2006 exceeds the cost of 12 Iraq wars.

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Pressure Mounts for Fannie and Freddie to Write Down Mortgages

With property values still tumbling, it's no surprise that nearly a quarter of the nation's mortgage borrowers owe more than their home is worth. Industry studies support the consensus that the farther a borrower sinks into negative equity, the more likely they are to throw in the towel. The severity of this catch-22 is now top-of-mind for government officials. The administration is reportedly pressuring Fannie Mae and Freddie Mac to make principal write-downs a key component of their foreclosure prevention efforts.

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Consumers Don’t Expect Housing Recovery Until 2013, Experts Agree

Americans continue to grapple with uncertainty about the housing market, with 58 percent of U.S. adults expecting recovery to be at least another two years away. Rick Sharga of RealtyTrac and Pete Flint of Trulia are of the same mind as consumers. They peg the housing recovery to begin taking shape between 2013 and 2014. The robo-signing debacle has left most consumers mired in distrust of banks and the government. The industry experts say its effect on REO sales will be minimal, but the impact on consumer confidence could be especially damaging.

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OneWest Becomes Early Adopter of HAMP Principal Reduction Program

OneWest Bank, the Southern California regional lender that was formed out of the old IndyMac, announced Tuesday that it has implemented the new Principal Reduction Alternative (PRA) piece of the administration's Home Affordable Modification Program (HAMP). OneWest is one of the first servicers to officially launch the program, which was initially introduced by the Treasury in late March to provide some mortgage relief to the growing number of homeowners underwater on their mortgage.

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Report: More Than a Third of Americans OK with Strategic Default

With housing woes capturing front-page headlines in the United States, the odds of distraught homeowners becoming even more frustrated and opting to abandon their mortgage obligations has become a growing concern within the industry. A survey by the Pew Research Center found that more than a third - 36 percent - of Americans believe the practice of ""walking away"" from their mortgage payments and their home is acceptable, at least under certain circumstances.

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FHA Program for Underwater Borrowers Now Underway

Tuesday marked the start of a new government housing program designed to help the millions of Americans who owe more on the mortgage than their home is worth. The Federal Housing Administration (FHA) is now offering certain non-FHA borrowers with negative equity the chance to refinance into a new FHA-insured loan, as long as existing lien holders will write off at least 10 percent of the unpaid principal balance. Officials suggest the program will provide 500,000 to 1.5 million underwater borrowers with new mortgages, but analysts say the number is closer to 250,000.

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Lawmakers Challenge Fannie Mae’s New Policy on Strategic Defaulters

A faction of House Democrats have called on Treasury Secretary Timothy Geithner and Fannie Mae's regulator to suspend the GSE's recently announced policy to sue homeowners who strategically default on their mortgage. The group of lawmakers, led by Rep. John Conyers, Jr. of Michigan, called the policy ""opaque, overbroad, and punitive."" They decried Fannie for using taxpayer dollars to penalize underwater homeowners, and maintained that the policy runs counter to the national need to stem a devastating tide of foreclosures.

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Underwater Homeowners Decline to 11M: CoreLogic

The number of underwater homeowners has declined for the second consecutive quarter. CoreLogic reports that 11 million borrowers owed more on the loan than their home was worth at the end of June. That equates to 23 percent of all residential properties with mortgages, and is down from 11.2 million, or 24 percent, at the end of March. It seems like good news on the surface, but the company says foreclosures, rather than meaningful price appreciation, were the primary driver behind the change in negative equity.

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Double-Dip Recession Threatens to Shave 20% off Home Prices: Moody’s

Could the U.S. economy slip back into the throes of the recession that nearly crippled the nation's financial system and protracted any semblance of a housing recovery? The analysts at Moody's think so. They say the odds of a near-term double-dip recession have increased to one in four. And they warn that if the economy sinks back into recession, housing activity will follow. If such a scenario were to play out, Moody's says home prices are likely to fall by another 20 percent before they stabilize in early 2012.

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Zillow: Smaller Percentage of Homeowners Underwater in Q2

The percentage of borrowers underwater on their mortgage declined during the second quarter, but that welcome change of pace could come to an abrupt end as home values are again beginning to fall in markets across the country. Zillow reported Monday that as of the end of June, 21.5 percent of single-family homeowners with a mortgage owed more on the loan than their home is worth. That's down from 23.3 percent in the first quarter of this year, and 23 percent during the second quarter of 2009.

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