According to information released by CoreLogic yesterday, about .2 million fewer homeowners are underwater on their mortgages now than were at the end of March. However, the presence of a home equity loan substantially increases risk of default, the analytics firm added[1]. 38 percent of underwater borrowers have a second mortgage compared to 18 percent underwater without a home equity line of credit. Homeowners also tend to be in more dire straits if they are in an underwater position with two loans rather than one, the report added.
Mark Fleming, CoreLogic’s chief economist, emphasized that “many borrowers in negative equity are still able and willing to make their mortgage payments,” adding that “income shocks” like divorce, job loss and death are the best risk predictors for foreclosure. Fleming believes that negative equity will likely “weigh on the housing market recovery by holding back sale and refinance activity” for the foreseeable future[2].
Do you think that more action needs to be taken to help these homeowners, are is this a painful but essential part of the recovery process?
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[1] http://www.dsnews.com/articles/underwater-ratio-improves-but-seconds-sinking-2011-06-07
[2]http://www.boston.com/business/articles/2011/06/08/more_than_230000_mass_homeowners_underwater_study_says/
I’ll say it again-Principal Reductions!!!
Give back the over inflated money that caused all this.