The Wall Street Journal reported on 24 Nov, 2009, that one in four homeowners in the US is “underwater” – meaning that they owe more on their mortgages than their home is worth.
A full 40% of those who took a home loan in 2006 are underwater, according to this report.
Douglas McIntyre, an editor at 24/7 Wall Street writes, “The news about underwater real estate is nearly as bad for banks as it is for homeowners. Default rates and foreclosures will almost certainly continue to rise. Banks will end up owning more and more properties that they are ill suited to sell. Many of those homes will be auctioned off at a fraction of what their values were two or three years ago.”
Who's saying that the worst of the recession is over for the US?
Anybody who understands human behaviour will also understand that it does not make a difference to a person under 7 feet of water to be under 9 feet, or for that matter, 25 feet of water. Enough of those borrowers, following this dictum, would have tanked up on personal loans, credit card debt and any other form of borrowing.