[Iran Press TV] Nearly a quarter of homes financed by mortgages in the US have a net worth lower than the balance of their outstanding loans, a real estate analytics firm reports.
The report issued by CoreLogic stated that roughly 11.2 million such loans existed at the end of the first quarter of 2010. Referred to as "underwater," such mortgages are usually caused by the lender purchasing a home at the peak of a housing bubble.
Calculating how many households are underwater is critical to forecasting future foreclosures, the report says. In many cases, declining house prices force the lenders to sell their home at a price lower than what is owed on the mortgage.
The practice, called a "short sale," is steadily rising across the United States. Short sales have more than tripled in the US since 2008, with 2010 projection at 400,000 cases, The Huffington Post reported.
Lenders usually choose short sales over foreclosures as it preserves their credit and allows them to purchase a home again in the future.
The Troubled Asset Relief Program (TARP), which was set forth by the US government in a bid to counter the subprime mortgage crisis, has failed to help the recovery of the ailing housing market in the US. |