Sinking Arizona: Half of State’s Mortgages are Underwater
February 1, 2010 By Joseph C. McDaniel, P.C.
If you face decisions on bankruptcy and your underwater mortgage, talk to a bankruptcy lawyer who understands the protections bankruptcy law offers you and your family.
There’s an old saying that captains must go down with their ships. Too many homeowners are hanging onto their houses and underwater mortgages, getting dragged down to financial ruin. Your house is not a ship. You are not a captain duty-bound to drown.
According to the Wall Street Journal, nearly one in four American homeowners is underwater. That is, they have negative equity in their mortgage, owing more on the house than it is worth.
In Arizona, the numbers are much worse. Almost half of Arizonans are underwater, being pulled deeper into financial trouble by the anchor they call home.
One of the problems with an underwater mortgage is that it’s unlikely to come up for air in the near future. Virtually every financial expert in the nation predicts a long, slow recovery for the housing market, meaning prices will be depressed for years, if not decades.
During those years, you will be paying the bank substantially more than what your house is worth. It’s like owning a Volkswagen and paying for a Maserati: it just doesn’t make a lot of financial sense.
In these tough economic times, many people face the prospect of bankruptcy. A few years ago, people who faced bankruptcy worried that they would lose their homes. People who face bankruptcy today are often relieved to find they are free to walk away from their waterlogged homes.
Prices of homes keep dropping month after month. Even bargain hunters who bought last houses last year at historically low prices are starting to find themselves underwater: 11 percent of those houses are already worth less than what their owners agreed to pay for them.
Homeowners who hope to negotiate their way out of their mortgage problems are typically finding unwilling partners when they visit their banks. Bankers are usually unwilling to lower principal and payments. They want what you agreed to pay; even more to the point, they don’t want others who are underwater to get the idea that their principals and payments might be reduced, too.
So banks are holding the line on mortgages — and holding their breath, too. The more people who keep paying on upside-down mortgages, the better off the bottom line is for bankers.
If you face decisions on bankruptcy and your underwater mortgage, talk to a bankruptcy lawyer who understands the protections bankruptcy law offers you and your family.
ABOUT THE AUTHOR: Article provided by Joseph C. McDaniel, P.C.
Attorney Joseph C. McDaniel has been practicing bankruptcy law in Arizona since 1980 and is recognized by the Arizona Board of Legal Specialization as a Bankruptcy Specialist. Fewer than 30 attorneys in Arizona have earned this title. Mr. McDaniel also enjoys an AV peer rating* as well as a 10.0 rating from AVVO. He has served as the Chair of the Bankruptcy Section of the State Bar of Arizona and the Bankruptcy Committee of the GPS of the American Bar Association.
Copyright Joseph C. McDaniel, P.C.
More information about Joseph C. McDaniel, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
According to the Wall Street Journal, nearly one in four American homeowners is underwater. That is, they have negative equity in their mortgage, owing more on the house than it is worth.
In Arizona, the numbers are much worse. Almost half of Arizonans are underwater, being pulled deeper into financial trouble by the anchor they call home.
One of the problems with an underwater mortgage is that it’s unlikely to come up for air in the near future. Virtually every financial expert in the nation predicts a long, slow recovery for the housing market, meaning prices will be depressed for years, if not decades.
During those years, you will be paying the bank substantially more than what your house is worth. It’s like owning a Volkswagen and paying for a Maserati: it just doesn’t make a lot of financial sense.
In these tough economic times, many people face the prospect of bankruptcy. A few years ago, people who faced bankruptcy worried that they would lose their homes. People who face bankruptcy today are often relieved to find they are free to walk away from their waterlogged homes.
Prices of homes keep dropping month after month. Even bargain hunters who bought last houses last year at historically low prices are starting to find themselves underwater: 11 percent of those houses are already worth less than what their owners agreed to pay for them.
Homeowners who hope to negotiate their way out of their mortgage problems are typically finding unwilling partners when they visit their banks. Bankers are usually unwilling to lower principal and payments. They want what you agreed to pay; even more to the point, they don’t want others who are underwater to get the idea that their principals and payments might be reduced, too.
So banks are holding the line on mortgages — and holding their breath, too. The more people who keep paying on upside-down mortgages, the better off the bottom line is for bankers.
If you face decisions on bankruptcy and your underwater mortgage, talk to a bankruptcy lawyer who understands the protections bankruptcy law offers you and your family.
ABOUT THE AUTHOR: Article provided by Joseph C. McDaniel, P.C.
Attorney Joseph C. McDaniel has been practicing bankruptcy law in Arizona since 1980 and is recognized by the Arizona Board of Legal Specialization as a Bankruptcy Specialist. Fewer than 30 attorneys in Arizona have earned this title. Mr. McDaniel also enjoys an AV peer rating* as well as a 10.0 rating from AVVO. He has served as the Chair of the Bankruptcy Section of the State Bar of Arizona and the Bankruptcy Committee of the GPS of the American Bar Association.
Copyright Joseph C. McDaniel, P.C.
More information about Joseph C. McDaniel, P.C.
View all articles published by Joseph C. McDaniel, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
