The number of homes that are underwater on their mortgages has remained disturbingly high in 2010. Over 11 million mortgage loans are underwater and have negative equity. That is nearly 1/4 of all the mortgages in the United States.
Negative Equity & Foreclosures
There is a direct correlation between a high number of negative equity mortgages and the rate of foreclosures. When their are a lot of homes with negative equity, the foreclosure rates rise. Millions of homes were lost to foreclosure in 2008 and 2009. Before the recession hit in December of 2007, the foreclosure rates were much lower.
Back before 2007, and the sub prime lending melt down, many unscrupulous lenders and borrowers were too quick to enter into mortgage agreements for amounts that people could not afford within their budget. When the recession started and the rate of job loss spiked, many people could simply not keep up with their mortgage payments when one or both spouses lost their job. The unemployment rate continues at a historical level of over 11 percent. Many have been forced into bankruptcy in order to save or be saved from their home loans.