Millions Of Homeowners In Financial Trouble And May Walk Away

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Best Syndication News

(Best Syndication News) Although a recent report found that housing prices are higher is some areas of southern California, there is still a concern about foreclosures. Case-Shiller reports that housing prices may have stabilized.

The National Association of Realtors report that 16.7 percent fewer existing homes sold in December 2009 from the month earlier. These homes include: single-family residences, townhomes, condominiums and co-ops. For all of 2009 the number of existing homes sales is higher compared to 2008.

The NAR also says that home prices were up 1.5 percent in December compared to the previous year. “The median price rose because of an increased number of mid- to upper-priced homes in the sales mix,” Lawrence Yun, NAR chief economist said. The inventory fell by 3.29 million units (6.6 percent) in December 2009.

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But many Americans find themselves underwater after home values fell over the past few years. One in four homeowners owes more than the house is valued. One million people walked away from their mortgage last year.

There are some problems with walking away. Homeowners have legal obligations to the bank. Barbara Corcoran, a Real Estate Contributor for NBC, said people see the banks defaulting on their obligations, so the sentiment is changing. “Why am I killing myself when the house isn’t worth it,” she says homeowners are saying.

When asked about core values, Corcoran said you have an obligation to your neighbors. But she said there are other real “down sides” to walking away from your house.

1) You ruin your credit rating for between five and seven years

2) Credit card companies may raise your interest rate and lower your limits

3) If the bank catches up with you and wins a judgment they can garnish your wages. Although the banks have the legal right to do that, they rarely do.

Corcoran says the banks are going after judgments a little more now because they are in trouble.

There is some good news too. Dataquick reported Wednesday that the number of foreclosures declined last quarter in California. “There are mixed signals for 2010: It's unclear how much of the drop in mortgage defaults is due to shifting market conditions, and how much is the result of changing foreclosure policies among lenders and loan servicers,” the company said.

By: John Waters
Business Writer



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