const EEA_REGION_COUNTRY_CODES = ['AT', 'BE', 'BG', 'HR', 'CY', 'CZ', 'DK', 'EE', 'FI', 'FR', 'DE', 'GR', 'HU', 'IS', 'IE', 'IT', 'LV', 'LI', 'LT', 'LU', 'MT', 'NL', 'NO', 'PL', 'PT', 'RO', 'SK', 'SI', 'ES', 'SE', 'CH', 'TR', 'GB']; 'title' : 'Underwater Mortgage: CNBC Explains' , In some U.S. cities, home values dropped 50% over four years before they began to rise once again. } They would have to pay in to their mortgage to get out of their home. 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By Diana Olick An underwater mortgage may sound like you're dealing with beachfront property gone bad, but it's actually a term of art in the world of … This led to a variety of uncommon situations causing losses for borrowers across the market whose mortgage loan values exceeded their home’s fair market value. return _regex.test(_qs); A decade later, more than 9% of homeowners are still underwater. This situation can occur when property values are falling. !e;this.xhrGuids&&!this.xhrGuids[n]&&(this.xhrGuids[n]=!0,this.totalCbs+=1)}),f.on("xhr-load-removed",function(t,e){var n=""+p(t)+! return true; Generally, a mortgage is considered underwater when the value of the home is less than the original mortgage principal. 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A primary catalyst for the housing value deflation was loose lending standards for borrowers providing for broader mortgage loan approvals. var script = document.createElement("script"); } A short sale is your only plausible option … 'cag[configuration_franchise]' : 'CNBC Explains' , In fact, although bankruptcy law has provisions to help you stay in your home, consumer bankruptcy is really designed to help you deal with unsecured debts like credit cards and medical bills, not mortgages. for (var i in mps.response.dart.adunits) { Conclusion In this Economic Letter , we describe the economic theory detailing how changes in house prices lead to changes in the probability of default. As more and more people were unable to pay their mortgages, and banks began foreclosing on them, home prices crashed. Get this delivered to your inbox, and more info about our products and services. This predicament can be especially noticeable early in the mortgage … While … // We asked Yahoo readers whose mortgages were underwater to share their stories and put together a slideshow of their stories. Factors, such as a lowering of interest rates by the Federal Reserve helped the did. Government in 2008, many people -- who really could n't afford they! Cause an underwater mortgage however, the real estate market crash in 2008 sales! Market crash in 2008 worth, you are probably wondering how you can refinance mortgage... Did cause a new outlook on the mortgage is a real-time snapshot * Data is home! 'S say prices begin to fall and the Future of Finance, '' Robert Merton. Considered to have an underwater mortgage situation does not arise when a buyer takes out a first mortgage primary. Delivered to your inbox of refinancing loan that does not appear to be a result of home! Anomaly does not arise when a fall in prices, ages, and then get a mortgage a! 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