There is a stunning graph about foreclosures between 2005 and 2010 here. One of the pieces of info contained therein is that 23.3% of ALL mortgages are underwater. Not of sub-prime mortgages, or mortgages taken out during the boom, or mortgages in Florida, etc. That's 23.3%, or nearly a quarter, of every single mortgage in the US of A is underwater. The chart also shows that there will be over 1 million homes repossessed in the US in 2010.
Check this out:
NC only has 10% neg-equity, as compared to NV w/70% and FL near 50%.
The other thing that isn’t broken out is the depth underwater. If someone bought in 2005 with 100% financing they might be 5% underwater, but you start out 6% underwater due to realtor fees. Someone 5-10% underwater is in a much different situation than someone 50% underwater.
The sad thing is that banks might foreclose faster on people that AREN’T underwater, because they might make money off the foreclosure & sale. If a bank has an option of sitting on a non-performing underwater loan, delaying the recognition of a huge loss, or foreclosing and selling, netting a quick gain, which do you think they’ll do? I would hope that those people who can’t make their payments but have equity get refinanced & maybe cash-out a little to cover 3-6 months of payments.
Things aren’t great in housing, but they’re still better here than they are in FL or other bubble states.