Feb 14, 2008 10:02 pm US/Eastern
When A Home Is Worth Less Than The Mortgage
MIAMI (CBS) ―
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Declining Home Prices
CBS
The value of South Florida homes is collapsing. For generations, rising home prices have been central to a general sense of well-being. But h ome prices continued to fall in a record number across America, and especially South Florida.
Arturo Rodriguez kept getting bigger and bigger bills. He realized he'd soon be forced to either take out extra loans or put his home up for sale. Rather than ruining his credit, he was forced to sell.
"Had I stayed in my house, I would have been upside down. I would have had to make a short sale," said Rodriguez.
Some real estate services now estimate one out of three homeowners may be facing negative equity, being so-called "upside down" in their homes.
It usually takes a few years to happen: homeowners pay too much for a home they can't afford. They have growing mortgages, taxes, insurance and credit card bills. The solution usually winds up with getting a second mortgage or home equity loan. If the real estate market drops, homeowners end up owning a lot more than the home is worth.
Rodriguez says the banks and mortgage brokers deserve their share of blame. He explained, "As soon as I moved into my home, I started getting extra offers, new financing options. I could have borrowed a lot more than what the house was worth."
An analysis of home-price changes by South Florida ZIP codes can be found at www.zillow.com which shows a map of the region as a virtual checkerboard of good news and bad news.
Prices have fallen more than 10 percent since a peak in July 2006, making it the worst U.S. housing slump in 26 years.
Not only did Florida post the second highest number of foreclosure filings in the nation; it also had the second highest foreclosure rate in the U.S.
According to real estate tracking company RealtyTrac a total of 279, 325 foreclosures were filed in 2007 on Florida properties, which was more than twice the number of foreclosure filings in the state in 2006. RealtyTrac also reports that more than 2 percent of Florida households entered some stage of foreclosure during the year.
Nationwide, more than 2.2 million foreclosure filings were reported on nearly 1.3 million properties last year, a 75 percent jump from the year before.
Overall, the number of U.S. homes in some stage of foreclosure last year jumped 79 percent from 2006.
Nevada led the nation in foreclosures, followed by Florida and Michigan.
Prices fell in 77 of 150 metropolitan areas surveyed by a mortgage association. That marked the highest number of areas with a price falling since the group began keeping numbers in 1979.
The U.S. Department of Housing and Urban Development offers a wealth of information for homeowners who wish to avoid foreclosure.
Freddie Mac and the Bush Administration also provide useful information to homeowners who feel like they may be in over their financial heads.
The attorney general's office says if you think you've been a victim of mortgage fraud, there are several places you can go for help.
Contact the Florida Attorney General's Office 1-866-966-7226 or their website myfloridalegal.com or Office of Financial Regulation www.flofr.com
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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