Negative Equity Adds Another Crippling Factor

Forbes examines pitfalls of having a loan worth more than home
By Nick McMaster,  Newser Staff
Posted Jan 31, 2008 6:45 PM CST
Negative Equity Adds Another Crippling Factor
A sign in the window indicates a foreclosed home Tuesday, Jan. 29, 2008, in Artesia, Calif. The number of U.S. homes that slipped into some stage of foreclosure in 2007 was 79 percent higher than in the previous year, a real estate tracking company said Tuesday. (AP Photo/Ric Francis)   (Associated Press)

(Newser) – Foreclosure is scary enough, especially at its current pace—79% more US homes foreclosed in 2007 than the year before. But, Forbes writes, the housing crisis is dumping an even scarier problem on mortgage holders around the country: negative equity, in which a mortgage is worth more than the house for which it was borrowed.

Where is negative equity the biggest problem? The county encompassing Detroit tops the list, with 10,622 homes in foreclosure and with negative equity—and with 176 at $100,000 or more. But with housing prices continuing to fall and mortgages’ adjustable interest rates continuing to rise, negative equity seems likely to affect more Americans in the months to come. (Read more mortgage stories.)

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