A recent Wall Street Journal article quoted figures estimating that 23% of homes have mortgage balances greater than the value of their homes — a condition referred to as being “under water” in your home.
Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay — more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. “The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that,” the study said.
Bringing it home to North Carolina
The highest rates of foreclosure in North Carolina are in the urban (Wake, Guilford, Mecklenburg) and surrounding counties (Union County in particular), and in the mountains (Caldwell County, etc.), where investment property was marketed like this: “Buy a new lot or spec house as an investment, on an interest free, 100% financing, and we’ll guarantee you a buyer within 2 years, at a profit to you.” That all assumed that property values would continue to increase, and that didn’t happen.
For more insight on dealing with a possible foreclosure or distressed property, see our three-part series:
Part One: Covered the foreclosure process and defined some basic real estate terms related to distressed sales.
Part Two: Questions and Answers on preventing foreclosure, negotiating with a mortgage company, and what to do about an adjustable rate mortgage that will soon reset.
Part Three: Questions and Answers on short sales and sifting through the confusing offers from those who want to help distressed homeowners.