Yesterday I did an entry about why foreclosures were occurring at such a rapid pace, and who was to be blamed. Today the government released new data showing just how extensive this mortgage crisis really is.
There are currently 8.3 million households in the United States considered "Under water" with their mortgages. This means they owe more money on their homes than the actual asset, the home, is worth. That translates into one in every 5, or 20% of all homeowners with a mortgage owing more money then their homes are worth right now. During the forth quarter of 2008, an average of 230,000 homeowners fell into the negative each month. Experts expect that if the downward trend in home prices continue, dropping just another 5%, than there will be another 2.1 million homeowners going under water as well. Just last year the value of all the homes in the US fell an estimated $2.1 trillion.
There is some good news coming out today though. Obama and his economic team unveiled more details about their home foreclosure rescue plan which looks to restructure loans for homeowners who are under water, but are still paying their mortgages on a monthly basis. The new plan will allow banks to restructure the loans with a lower monthly payment in hopes that the homeowners will be able to afford to pay it off in the long run. In order to stop the vast economic slide the entire world is going through, I believe the first step is to stabalize the housing market which sparked this mess in the first place.
There is some inetresting commentary on the various Credit markets at the Credit and Loans Forum
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