Foreclosures for Sale, Underwater Mortgages High in Florida

by Donald Hanz on States

A recent report, released by First American CoreLogic, showed that Florida ranks third when it comes to underwater mortgages. This could easily mean that the number of foreclosures for sale will soon put the state on top of the list.

In addition, the country has over 11.3 million homes with negative equity. This figure is up from last year’s 10.7 million households.

For those of you who have only now encountered the term negative equity or under water, it simply means that the owner owes more than what their houses are currently worth in the market. Usually, this happens when there is an increase in the amount of mortgage owed on the property, a considerable decline in the market value of the home or even because of both reasons.

In Florida, about 48 percent or 2.2 million of the mortgages can be considered to be under water. There are also about 171,710 or 3.8 percent of the mortgages that are nearly under water.

Nationwide, Nevada has the highest number of borrowers with negative equity at 70 percent. Other states with the same high percentage include Arizona with 51 percent, Michigan with 39 percent and lastly, California with 35 percent.

According to experts, the increase in the number of underwater mortgages can be due to the many foreclosed properties for sale, which are usually sold at considerably less than their market value. Such sales activity drags down home prices and home values, resulting to these borrowers with negative equity.

Because of the market trend, a lot of homeowners are becoming worried and unsure about whether they should still continue with their mortgage payments after realizing that their homes are now valued lower than the amount they initially paid.

At present, the large inventory of Florida foreclosures is still considered to e a major problem. Analysts believe that 2011 will be more challenging with the number of foreclosures for sale expected to rise.

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