Nearly 29% of Mortgaged Homes Underwater – Candidates Silent

Current data shows that 28.6% of homeowners with mortgages owe more than their homes could sell for. This is according to data released by Zillow.com. That’s up from 26.8% in the second quarter. Third quarter home values declined 0.2 percent from the previous quarter and are down 4.4% year over year.
The major factor influencing this increase in negative equity homes seems to be the increasing time involved in the foreclosure process. The robo-signing scandal in 2010 put a huge number of foreclosures on hold, and they’re just now beginning to get back to a normal level, though the time involved is still much longer than it was a couple of years ago.

Homes in a negative equity situation are considered at high risk of foreclosure, as homeowners may reach a point when they decide to resort to “strategic default.” Also known as “jingle mail,” they just send their keys in to their lender and leave the home. This results when the homeowner believes that there is no longer hope in regaining lost equity. Of course, an unemployment rate hovering around 9% is also a factor.

Over half of all homes in some cities are underwater:

• Phoenix, 66.2%
• Atlanta, 58.7%
• Riverside, CA, 51.4%
• Tampa, 56.5%
• Sacramento, 50.9%

Other online articles are commenting on the silence of presidential candidates related to the housing situation. They’ve debated over job creation, spending cuts, tax increases and more. However, there’s very little discussion of the housing and mortgage crisis, the worst since the Great Depression.

Since the implosion of the housing market in 2007, more than 5 million homes have been foreclosed. Another 4.3 million homes are sitting vacant or in the foreclosure pipeline. When the process slowed after the robo-signing situation, prices stabilized a bit, but now that foreclosures are ramping up again, prices are declining.

While it is generally agreed that the broader economy can’t recover without a housing recovery, it is believed that Republican candidates aren’t saying much because they believe that government efforts to date have been ineffective. Statements made so far seem to indicate that the Republican position is to let the foreclosure process run its course rather than more government intervention.