Bankruptcy

Underwater Mortgages in the U.S. by City

By Chris Kramer

For most of us, the story of how the Great Recession started is a familiar tune: the stock market soared because of speculation on the real estate market, which meant real estate prices soared as well. And when the bubble burst, millions of Americans lost serious money and foreclosure rates climbed steadily.

And the latest news, according to real estate information source Zillow.com, still reflects a seriously distressed housing market in many parts of the country.

Underwater Homes

One of the biggest problems homeowners face today is negative equity: when you owe more on a home loan than the property is currently worth, you?re said to have negative equity, or be ?underwater? on your mortgage loan.

According to sources, a whopping 23.3 percent of U.S. homes are currently underwater, slightly more than the 23 percent reported in the last quarter of 2009. Here?s a look at the U.S. cities currently suffering from the highest negative home equity rates:

• #15: Jacksonville, Florida. Here, 127,807 homes, or 49.1 percent of residences, are currently underwater.
• #14: Riverside, California. This city has a 51.2 percent underwater rate, with 347,778 individual homes.
• #13: Tampa, Florida. 286,303 underwater homes give this city a 53.1 percent rate.
• #12: Vallejo, California. With 41,436 homes underwater, this city has a 54.7 percent rate.
• #11: El Centro, California. A 54.9 percent rate means 12,103 houses in this city are underwater.
• #10: Port St. Lucie, Florida. With 54,190 homes underwater, this city has a 56.2 percent rate.
• #9: Stockton, California. Once the foreclosure capital of the country, this city now has the dubious distinction of a 57.7 percent underwater rate, with 64,614 homes underwater.
• #8: Fort Meyers, Florida. Here, 58.2 percent of homes (83,533) have negative equity.
• #7: Lakeland, Florida. With 62,423 homes underwater, this city has a 58.5 percent rate.
• #6: Merced, California. 24,076 underwater homes, for a rate of 58.8 percent.
• #5: Modesto, California. A 60.7 percent rate with 54,417 homes underwater.
• #4: Reno, Nevada. 45,107 homes underwater gives Reno a 64.4 percent rate.
• #3: Phoenix, Arizona. Here, 64.4 percent of homes (totaling 479,692) have negative equity.
• #2: Orlando, Florida. With 289,209 homes underwater, Orlando has a 74.8 percent rate.
• #1: Las Vegas, Nevada. A whopping 80.6 percent of homes (254,880) have negative equity.

Negative equity is no small matter for affected homeowners, considering that mortgage modifications have been difficult to process and foreclosure is generally a trying process.

For some people facing foreclosure of their homes, a Chapter 13 bankruptcy filing may help, but it may not help the problem of owing more on a house than it's worth.

If you have negative equity in your home, consider speaking with a personal bankruptcy lawyer about your options.

Additional Resources

Estimates of Negative Equity among Nonprime Borrowers (PDF)

Foreclosure Mitigation Efforts in the United States (PDF)

Full post as published by The Bankruptcy Blog on June 06, 2010 (boomark / email).