What Do Underwater Mortgages Mean For You?

Posted on October 9, 2013 by

Across the country there are cities which have high percentages of underwater houses. Cities like Tampa, FL have as much as 43 percent of area home mortgages seriously below its formerly established market value. Fortunately for investors there are numerous areas like Tampa which have a large volume of homes with a mortgage balance exceeding the home’s value by at least 25 percent.  REIAComps helps to quickly see the number of foreclosure sales of these types of houses in your market month after month.

By looking at REIAComps valuation and sales data, we were able to actually verify the two market areas with a higher percentage of foreclosure than Tampa. They are Las Vegas, NV and Lakeland, FL. According to the local Tampa newspaper, The Tampa Tribune one additional factor is this market condition restricts the number of homes that can be listed for sale and exacerbates a region’s temporary shortage of homes on the market.

You may know, homeowners whose mortgage balance exceeds the current property value experience the futility of trying to get a refinance. Refinancing options for so-called “underwater” mortgages are limited since nearly all lenders want some equity in the dwelling, ideally about twenty percent.

Overall, borrowers should not give up the ship. There are options which exist, especially from the federal government’s Making Home Affordable Program (HARP). The real test for qualifying is there can be no missed payments or possibility of foreclosure.

So let’s say a person after reading the last sentence above knows they wouldn’t qualify. Next is, If a mortgage holder not only has an underwater mortgage but also has missed payments, they may qualify for HAMP, the federal Home Affordable Modification Program available through mortgage lenders.

To qualify, an owner must demonstrate financial hardship that puts their mortgage in imminent danger of default. Now, if neither HARP, HAMP nor repeated monthly Fish Fry’s for mortgage payments work, the dwelling is more than likely going to wind up in foreclosure at some point. This is where you come in.

Foreclosed REO’s and HUD houses are some of the most profitable deals to be had. You may find, there are some bright spots across your market where the numbers of underwater mortgages are growing. Literally you could have a real estate gold mine right in your back yard. Using REIAComps makes the effort to identify these markets far easier.

Mark JacksonMark Jackson is an appraiser, real estate investor and property valuation specialist who teaches others to get more out of their real estate investing business. In 1999, Mark founded an appraisal company and soon found his true gift was analyzing property values for real estate investors. Since 2000, has closed millions of dollars’ worth of his own domestic and international real estate transactions. Mark’s passions are: faith, family, golf and real estate.

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  1. In the above mortgage related article. After the bank bailouts still no one is questioning that any mortgage that was originated with less than 20 % down had Mortgage Insurance.
    Intreresting how nobody questions that its like the Banks got to double dip so to speak, and got money on both ends.
    Then some like me that was a good honest broker posting comments while looking for a Mortgage related job.

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