Upside-Down Mortgages and Sinking Home Prices

Gary North reports:

An upside-down mortgage is a mortgage for which the home owner owes more on the mortgage than the home is worth.

According to a report on the CBS TV "Early Morning Show" on March 10, if house prices fall another 10% nationally, 20 million households will be in an upside-down condition.

As of the year 2000, at the last census, there were 83 million residential properties. Almost 68 million were owner-occupied. Of these 68 million properties, 67% had a first mortgage. So, about 45 million homes had mortgages.

If the 20 million figure is correct, then about 43% of all mortgage-owing households would be stuck with underwater mortgages. But this assumes conditions of 2000, before the really maniacal phase of the bubble took place.

Thanks Fannie Mae,without you buying houses with 4% down might never have happened.