Associated Press economics writer Josh Boak reports that “housing debt still traps 10 million Americans,” keeping these homeowners from selling because they are underwater (or functionally underwater) on their mortgages. Boak paints a somewhat bleak picture, if only because the Great Recession happened roughly six years ago, and we’re still looking at too many people owing more on their homes than their homes are worth.
This, in turn, continues to put a damper on the economy.
Boak quotes Stan Humphries with Zillow: “The unfortunate reality is that housing markets look to be swimming with underwater borrowers for years to come.”
Wikipedia generally defines underwater mortgages in terms of “negative equity,” where the value of an asset used to secure a loan is less than the outstanding balance on the loan, a problem often precipitated by a housing market crash. Many homeowners in this situation have trouble selling their current homes and buying new ones.
Because of negative equity, many first-time homeowners in this economy have found that their supposed “starter home” has become more of a permanent home, at least for the time being, and it’s not likely to drastically improve any time soon, based on Boak’s report.
Homeowners who find themselves with mortgage trouble can get help, from loan modification to foreclosure defense. It’s not inconceivable that many of the millions of Americans Boak describes in his report are struggling to make ends meet as a direct result of being underwater.