Survey: 'Underwater' Mortgages To Hit 48 Percent
LINDA WERTHEIMER, host:
When you owe more on your mortgage than your house is worth, that's called being underwater. A new study finds that within two years, half of American homeowners could be underwater.
NPR'S Chris Arnold reports.
CHRIS ARNOLD: For many, the home has morphed from a piggybank into an albatross; that's a line from the Deutsche Bank report, which dramatically invokes the Samuel Taylor Coleridge poem "The Rime of the Ancient Mariner." The poem is about a ship that's cursed and becalmed at sea after a mariner kills a seabird, an albatross. At one point he wears the giant dead bird around his neck in shame. Likewise, according to the study, half of all homeowners in America will soon suffer the indignity and financial strain of being weighed down by a house that's worth less than they owe on it.
Mr. MARC ZANDI (Chief Economist, Moody'sEconomy.com): For many millions of Americans, yes, the home is becoming a very significant financial weight.
ARNOLD: Marc Zandi is the chief economist with MoodysEconomy.com. He says a lot of people are underwater already.
Mr. ZANDI: One-fourth of American homeowners are underwater on their mortgages.
ARNOLD: And so, I mean, do you think this report is right? Are we going to see half the country underwater?
Mr. ZANDI: I would be surprised if it gets that bad. Now it's bad and it's still going to get worse, but it sounds pessimistic to me.
ARNOLD: There have been some signs of hope. The pace of home sales has been recovering slightly and home prices around some metro areas actually showed a monthly increase in a recent report. But Zandi says the foreclosure crisis continues to put downward pressure on prices. So he says efforts to prevent foreclosures are crucial.
Chris Arnold, NPR News.