You may have heard homeowners underwater on their mortgages but not behind on the payments ask, "So where's my bailout?" (You may in fact have said it yourself.)

Some companies are answering, "Right here."

About 20,000 homeowners nationwide, including 500 in Maryland, are enrolled in the Responsible Homeowner Reward program, which pays borrowers incentives to stay current on their mortgage. The homeowners were offered the future cash payments by their mortgage servicer, mortgage owner or private mortgage insurer -- about a dozen companies are participating all told.

Frank Pallotta, managing partner of the Rumson, N.J.-based Loan Value Group, which created and administers the Responsible Homeowner Reward program, says participants include the PMI Group and GMAC Mortgage.

The dollar amounts vary, but the basic idea is this: Stay current on your mortgage, get a cash payment at an agreed-upon time -- when you refinance or sell, for instance. The program aims to prevent "strategic default" -- where borrowers who can afford the payments decide they're throwing good money after bad and simply walk away -- by offsetting some of the lost value.

"For years and years, the mindset was, people pay their mortgage because it was the moral thing to do," Pallotta said. "Well, it might have been, people pay their mortgage because they have equity. Once that equity is gone, you need to replace it or you will experience a higher default rate."

A borrower who's never missed a payment but owes 50 percent more on his mortgage than the home is worth "is as much a risk to the owner of that loan" as a more modestly underwater borrower who's two months behind, he contends. "The question becomes, 'Why am I going to make this payment? I'm so far underwater,'" he said.

Continue reading "A 'responsible homeowner' reward" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (0)
Categories: Mortgages, The foreclosure mess, Underwater
        

It doesn't look like many underwater homeowners will be surfacing anytime soon.

About one in five borrowers in the Baltimore region owe more on their mortgages than their homes are worth, a figure virtually unchanged all year, according to new estimates from real estate data firm CoreLogic. The company's negative-equity estimate has hovered around 19 percent from the first through third quarters, affecting about 120,000 homes.

It's hard to expect anything different for the time being. Home prices continue to drop, eating away at the progress borrowers make via monthly payments. About 33,000 more homeowners in the region are just barely keeping their heads above water, with their values no more than 5 percent above the amount they owe, CoreLogic said.

But Baltimore and its surrounding counties are collectively doing better than the state as a whole, according to CoreLogic. About 23 percent of borrowers in Maryland are underwater, seventh highest among the states.

Continue reading "'Underwater'-homeowner ranks remain high" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (15)
Categories: Underwater
        

Twenty-five percent of homes that sold in the Baltimore region over the summer changed hands for less than their owners paid for them, up from 21 percent a year earlier, real estate search site Zillow says.

The share of homes selling at a loss is down from the spring, however, when it peaked at nearly 28 percent. (Zillow shows the percentage of losses generally spiking in the first half of the year, dipping in the summer and then heading back upward.)

The situation is worse nationally, with just over a third of homes -- 34 percent -- selling for a loss.

The calculation excludes foreclosures. Zillow crunched transactions from June through August, putting the most weight on sales in the most recent of the three months.

Oh, and it looked at the new sales price vs. the previous price, so that doesn't include homes that were a net loss for the owners after taking into account transaction expenses (like transfer taxes and real estate commissions) or money spent on renovations.

So what's the breakdown at a more local level? It varies a lot, as you might expect, though most places are seeing losses rise.

Continue reading "One in four homes in Baltimore region selling for a loss" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (9)
Categories: Housing stats, The foreclosure mess, Underwater
        

Nearly one in four Marylanders with a mortgage owed more on those loans than their homes were worth this spring, worse than all but six other states -- and a large number of homeowners who can't easily sell or refinance.

That's according to new figures from real estate data firm CoreLogic, which estimates that nearly half the states have fewer than 15 percent of their borrowers "underwater."

But the state's nearly 24 percent figure -- essentially unchanged from the first three months of the year -- remains much lower than the hardest-hit states. Sixty percent of Nevada's homeowners with a mortgage owe more than their homes are worth. Nearly half of Arizona's homeowners are in similar straits.

Several factors are contributing to states' negative equity: Falling home prices, low down payments and loans homeowners took out against their properties when the market was hot. 

One result is homeowners stuck in place, unable to sell unless they bring money to the settlement table or convince their lender to approve a short sale.

Continue reading "Md. has seventh-highest share of underwater homeowners" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (1)
Categories: Mortgages, Underwater
        

The number of homeowners underwater on their mortgages has -- at least temporarily -- stabilized at 120,000 in the Baltimore metro area, according to new estimates from CoreLogic.

The real estate data company says that amounts to 19 percent of all mortgaged homes in the first three months of this year, essentially the same as at the end of last year. Last spring, by contrast, just over 100,000 homeowners owed more on their mortgages than their homes were worth, the company said.

Home prices have continued to drop since the beginning of the year, though, so the next underwater figure might show a return to the upward climb. (About 33,000 Baltimore-area homes were on the edge of negative equity in the first three months of the year, CoreLogic says.)

Maryland remains in the top 10 for its share of underwater borrowers, ranking 8th with just under 24 percent. But the hardest-hit states are much worse off.

Nevada is top of the heap -- more than 60 percent of its mortgaged homes are worth less than the loans on them, CoreLogic estimates.

So how much money are we talking about? The average underwater American is upside down to the tune of $65,000, about the same as the average underwater Marylander.

By the way, it's getting really lonely shouting into the void, which is what we bloggers are having to do while the commenting system is down due to spammers. If you email your comments to jhopkins(at)baltsun.com, I'll post a round-up with links to any relevant posts. Let me know how you'd like to be identified.

UPDATE: Hooray, comments are fixed! Opine away.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (52)
Categories: Underwater
        

An Annapolis homeowner writes in with a question that some of you are probably pondering yourselves:

We bought a house in March 2007 - towards the end of the boom. Anyway, the value of our home has decreased by about 23% on a good day and as low as 45% according to our bank (not the mortgage holder).

Right now, we do not need to sell our home however my husband's career moves us around quite a bit. Where can we go for information to know what our options are in the event we need to sell before the value goes back up? We were thinking of a real estate attorney but are a little nervous with all the people trying to take advantage of others in a bad situation.

We want to be ahead of the game as much as we can so we are starting now instead of "too late"!

Suggestions? Personal experiences?

I pointed her toward the network of "low bono" attorneys with the nonprofit Civil Justice in Baltimore as one possible starting point, but I thought you all might have good ideas about how underwater borrowers might plan for the future.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (13)
Categories: Help wanted, Underwater
        

People who decide to stop paying on an underwater mortgage and let the lender foreclose are the target of a lot of heated debate, but they might have more support out there than they think.

Just over a third of Americans polled by the Pew Research Center say "walking away" from a mortgage is an acceptable practice, at least in certain situations. Nineteen percent say it's OK, period, and 17 percent more say it depends on the circumstances, Pew said Wednesday.

The group surveyed 2,967 adults, both homeowners and renters.

A survey released in April by financier Fannie Mae, meanwhile, said all but 12 percent of respondents called it unacceptable to walk away from an underwater mortgage. (Fannie Mae, naturally, is in the anti-walk camp.)

Both economic research and the Pew survey find that just over 20 percent of borrowers -- about one in five -- are underwater, meaning they owe more than their homes are worth.

"Not surprisingly, how people fared financially during the Great Recession is linked to their views on walking away from a mortgage," Pew editor Rich Morin wrote in a piece about the poll.

Continue reading "Walking away from mortgage OK, some say" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (11)
Categories: The foreclosure mess, Underwater
        

HSH Associates, a financial publisher, created waves last week when it proposed a new loan-help program -- not for homeowners facing foreclosure, but for people who are paying on time and can't refinance into a lower interest rate because they're underwater.

"If a borrower did not cause a decline in his or her home's value, has been meeting his or her obligations without fail and is now, outrageously, being asked to pick up part of the tab for failed homeowners, he or she ought to get some subsidized benefit for doing the right thing," the firm wrote. "If it works, there would be a declining cost to the taxpayer over time, with the actual cost of 'assistance' possibly falling to zero."

The details:

Continue reading "An underwater mortgage proposal" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (10)
Categories: Underwater
        

Many homeowners behind on their mortgages stopped paying because they simply didn't have the money. A growing number, though -- one in eight, by some counts -- defaulted on purpose.

They're generally far underwater on their mortgages and want their lenders to foreclose because they want out. When stories started popping up several years ago, they were all anecdotal because no one was attempting to count. Now researchers are finding that these walkaway borrowers are pretty numerous -- and debate is raging about whether it's a reasonable reaction to a difficult situation or a selfish move that damages neighborhoods.

I thought you all would like to get to know a walker. What triggers such a decision? What is life like afterward?

Wallace Farmer, who left his home in Baltimore this summer, agreed to share his experience. He's part of the community of commenters here, so some of you already know a bit of his story.

Boiling a complicated situation down, he came to the city five years ago with plans of living as an urban pioneer and owning one rental on the side as a long-term investment. He left with savings shot, credit ruined and not one or even two but rather three mortgages defaulted.

How he ended up with two investment properties when he only intended to have one, and why he cut ties with a home he loved, is a boom-and-bust tale. You'll find the story here.

Posted by Jamie Smith Hopkins at 8:24 AM | Permalink | Comments (19)
Categories: Mortgages, The foreclosure mess, Underwater
        

The number of homeowners here who are underwater dipped ever so slightly in the spring, but it remains a distressingly large group. About 103,000 homes in the Baltimore metro area are worth less than their mortgages, real estate information firm CoreLogic estimates.

That's roughly 16 percent of all homes with mortgages. And 5 percent more -- 32,000 homes -- were right on the cusp of negative equity.

Statewide, the situation is worse, with 22 percent of mortgaged homes underwater and 5 percent more close to it. That's about the same as the national average, but of course the average is pulled up by large, hard-hit states such as California. Only eight states have higher negative-equity shares than Maryland. (We've been in the top 10 for a while.)

CoreLogic estimates that negative equity fell from 24 percent of mortgaged homes nationwide in the first quarter to 23 percent in the second quarter. But that's not because rising values lifted lots of homeowners above water.

"The declines were primarily due to foreclosures," the company says.

Continue reading "More than 100,000 Baltimore-area homeowners underwater" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (11)
Categories: Underwater
        

The number of people in Maryland who owe more on their mortgages than their homes are worth appears to be stabilizing. So says CoreLogic -- the real estate information firm formally known as First American CoreLogic -- in its latest report on the country's underwater-borrower problem.

About 23 percent of borrowers in the state were upside down on their mortgages in March, same as in December, the company said this week. The share of folks who are close to underwater also remained steady at about 5 percent.

Maryland ranked ninth-highest in the country for its percentage of homeowners with negative equity, a slight improvement over the end of last year. (Idaho worsened, overtaking us and Virginia for seventh place.)

Like Maryland, the country's negative-equity situation remained essentially unchanged overall.

"As house prices grow again and borrowers pay down their mortgage debt negative equity levels will begin to diminish," Mark Fleming, CoreLogic's chief economist, said in a statement. "The typical underwater borrower is likely to regain their lost equity over the next five to seven years."

Maryland might be in the top 10 for negative equity, but it's a far cry from the underwater leaders. Here's the list:

Continue reading "Underwater-borrower numbers stabilizing" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (0)
Categories: Mortgages, The foreclosure mess, Underwater
        

I asked you recently if you planned to buy a home in the next year, since I'm nosy that way. Forty percent of you said yes -- no doubt a higher share than a scientific poll would get, since I'm asking people reading a blog about the housing market.

The results are more involved than just that, though. Many of you are would-be buyers. As in, you'd like to buy in the next year but probably can't.

About 22 percent of you said that describes your situation. Most in that category are currently homeowners, not renters.

All told, 61 percent of renters who took the poll expect to buy in the next year.

Just 28 percent of homeowners said the same.

A number of you said in a past poll that you're underwater on your mortgage -- that's a major factor keeping people stuck in place.

Wonk reader M writes, "I have 20% down for a new house and have been ready to move for the past year. However, my house/mortgage is just about level and maybe a little under water and I don't want to deal with renting it out and possibly going a couple months paying two mortgages if I can't get it filled right away. So I am holding off for now, which is disappointing. If I could at least break even I would move."

What's your reason, if you're in the "want to move but can't yet" group?

Is anyone doing home-improvement projects in lieu of relocating?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Housing market experiences, Underwater