Mortgages classified as ‘underwater’ are ones where the amount owed on the property exceeds the property’s current value. This unfortunate trend has been rampant in the United States the last few years with the economic recession. Underwater mortgages negatively affect the homeowners because when they have negative equity in their home, they cannot qualify for refinancing the property. Not only can they not refinance, but we are also finding that they cannot sell the home for what they owe because the property won’t appraise for that value.
The great news is that we have just seen, for the first time in several years, a decline in these types of mortgages, which is great for real estate and the economy as a whole.
Source: Reuters via Yahoo! News
