Fewer people are getting under water on the bank loans on their homes. Underwater is when a person ends up owing more to the mortgage company than the home is worth. However, part of it is thanks to the number of foreclosures.
Fewer bank loans are getting underwater
The number of people under water on their homes — owing more in bank loans than the home is worth — is diminishing, according to USA Today. Underwater mortgages have become a problem for a lot 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 values dropping through the floor.In some urban areas, such as Chicago, the rate of foreclosures has’t been as bad as in other cities, especially in metro areas that are still heavy industrial centers.
Foreclosures played a part
The decline in underwater mortgages has been slight, only 0.5 percent. 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, but talking loan lenders into reducing debt when many a loan company is struggling is a tough sell.
Home values likely to stay down
It is likely that the housing market is not going to be at its best for some time. Record number of foreclosures, and fewer people confident enough to purchase a home or able to qualify for the financing due to tougher restrictions on credit, will work against the housing industry’s favor. However, growth has been slowly taking place, and a slower recovery than desired has appeared to be the most likely scenario.