Underwater Mortgage, Homeowner | featured news

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.

The average homeowner in the Obama administration's signature foreclosure-prevention program owes more on their mortgage than the home is worth, yet the program does virtually nothing to address this problem, according to a scathing new report by a government watchdog.

A growing number of homeowners are considering a "strategic default," walking away from their mortgages not out of necessity but because they believe it is in their best financial interests.

Less than 3 percent of "underwater" borrowers decide that the benefits of a new loan through government program are worth the closing costs.

Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said.