Underwater Mortgage | featured news

Record-low interest rates are out of reach for many homeowners, and a big reason is that millions are underwater. Obama and others are trying to assist them. U.S. interest rates are at rock-bottom levels, but that's not helping most Americans with mortgages.

With millions of homeowners still underwater, some local governments are considering a novel solution: condemning their mortgages through the power of eminent domain. “Federal programs have not been very successful at all, and the private programs have been of limited help,” said Gregory Devereaux, administrator for San Bernardino County, explaining the government's decision to consider eminent domain, a plan the mortgage industry considers the equivalent of the nuclear option. The hard-hit county's board of supervisors is expected to meet Thursday to consider proposals to help homeowners, including the possible use of eminent domain.

San Bernardino County, with some of the nation’s highest foreclosure rates, may use eminent domain to buy up mortgages and cut them to the current value of the homes.

With each passing month, the foreclosure crisis continues to slowly burn. The Obama Administration keeps splashing water on it—massive remodifications, mortgage settlement cash, rental programs—hoping something will stick. On Friday, here at the Clinton Global Initiative, in Chicago, HUD Secretary Shaun Donovan and FHA Commissioner Carol Galante announced yet another: a program to pool together mortgage loans on the brink of default, and save them.

Mortgage debt continues to be a major issue in the United States, nearly six years after home prices peaked, according to a report released last week by online real estate site Zillow. Americans continue to owe more on their homes than they are worth.

Nearly 1 in 3 homeowners with a mortgage in L.A. County owes more than the property is worth, new data show. These underwater loans hinder mobility and hurt prices because they tend to stymie the important move-up market.

Bank of America said Friday it would reduce by about $100,000 the amount owed by as many as 200,000 underwater homeowners as part of the recently announced government foreclosure settlement with top mortgage servicers.

A leading housing regulator on Monday announced changes to a government refinancing program that could help up to one million homeowners whose homes are worth less than their mortgage.

Talks between states and top banks over mortgage abuses are nearing agreement on a major sticking point that has bogged down settlement negotiations for more than a year.

The number of Americans who owe more on their mortgages than their homes are worth rose at the end of last year, preventing many people from selling their homes in an already weak housing market.