One of the effects of the housing crash was a lot of people getting underwater on property loans. However, less people are ending up that way with financial institution loans now. Underwater is where a home is devalued to the point where the owner owes more than the property is worth. However, portion of it’s because of the number of foreclosures.
Less underwater financial institution loans
USA Today reports that there are less individuals that are underwater under their property which means they owe more in financial institution loans than the property is worth. Underwater home loans have become a problem for lots of American homeowners, who went out to get a loan for a home, only for the value to plummet. Recreational and retirement hot spots like Nevada, Arizona and Florida were hit hard, with greater numbers of foreclosures and real estate prices dropping through the floor. Several heavy industrial centers did not have as bad of foreclosures on homes. Urban areas like Chicago didn't have problems either.
Part because of foreclosures
There was only a 0.5 percent decline in underwater home loans. A large portion of the reduction in people paying installment loans for more than a home is worth is likely due to the sheer number of homes that have been foreclosed, taking numerous mortgages off the books. There have been some incentives offered from the government, however talking lenders into reducing debt when many a loan business is struggling is a tough sell.
Still having low home prices
For a while it is expected that the housing industry will not go up. Record number of foreclosures, and fewer individuals confident enough to buy a home or able to qualify for the financing due to tougher restrictions on credit, will work against the housing industry’s favor. There has been growth seen though which might mean that a slower recovery will happen than expected.
Articles cited
USA Today
usatoday.com/money/economy/housing/2010-12-13-underwater-mortgages_N.htm
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