Friday, June 1, 2012

High Percentages of Underwater Mortgages in Chicagoland

An alarming number of mortgages in Cook County, Illinois are underwater.  In fact, in the greater Chicago area nearly 667,000 homes (or 44%) with a mortgage were underwater as of March of this year, the Chicago Tribune reports.  A mortgage is considered underwater when the amount owed exceeds the value of the home and is expected to remain so for the foreseeable future.  Those of us working in Chicago mortgage foreclosure are concerned about the high number of underwater mortgages in our state.  Significantly, 13% of the homeowners who were underwater on their mortgages were also delinquent on their payments by three months or more.  Such numbers indicate serious financial troubles for some Chicago-area families, despite minor improvements in the national economy.

Though many counties in the greater Chicago area are suffering high percentages of underwater mortgages, the numbers and total losses vary from county to county.  According to data from Zillow, a real estate website, 33.1% of homes had underwater mortgages, or negative equity, but the paper losses for those homes totaled approximately $5 billion.  On the other hand, some counties may have a greater percentage of homes with negative equity, but the total losses for that county could be less.  Kendall County, with 55.6% of homes with underwater mortgages, had paper losses of only $1 billion.

Homeowners whose mortgages are underwater are not necessarily facing Oak Park foreclosure.  As long as a homeowner is able to make payments on his or her mortgage, the possibility of foreclosure may never be an issue.  But many homeowners rightly may be concerned that their homes are not worth what they once were before the housing bubble burst.  Even if a homeowner is able to pay his or her mortgage, negative equity will become an issue upon attempts to place the underwater home on the market.  

Some homeowners even allow their mortgages to fall into strategic default when they decide to stop making payments on the debt despite possessing the ability to pay.  The homeowners literally walk away often because they fear they will not be able to regain equity in their homes.  It is important to remember that allowing your mortgage to fall into strategic default could have financial repercussions, including potentially damaging your credit, so you should make sure to complete extensive research and possibly speak with a tax attorney or accountant prior to taking that step.

Our Cook County foreclosure defense attorneys know that realizing your mortgage is underwater can be a very worrisome and even an overwhelming prospect.  However, acknowledging you may need help could be the first step toward regaining your financial security.  If you are a homeowner whose loan was serviced by Bank of America, you may be eligible for a new principle reduction program for underwater mortgages.  (To read more about Bank of America’s principle reduction program, read our previous post here.)  You also may want to consider speaking with a mortgage foreclosure defense attorney to learn more about the legal options available to you.

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