More Homeowners With Second Mortgages Underwater

By Kyle Chezum Updated on 6/7/2011

 

There is no doubt that during the height of the housing crisis, a high number of homeowners were and still are underwater on their mortgage home loans.  But an upcoming report released by real estate data firm CoreLogic reveals several additional facts about the issue of underwater homeowners that may have been missed during all the activity.  Specifically, the findings of the report show that homeowners with second mortgages are significantly more likely to be underwater on their homes that homeowners without these second loans.

It isn't a question of total debt load.  Homeowners with total mortgage balances both large and small are underwater.  Rather, it seems that homeowners who took advantage of their equity and added a second mortgage through a strategic refinance in order to get cash for medical bills, home improvements, cars, and other large expenses have ended up with proportionally more debt than their homes are worth.  The CoreLogic study reports that almost 40% of homeowners with second mortgages are underwater on their homes.

A comparatively meager 18% of homeowners without second mortgages are also underwater, though there is absolutely nothing "meager" about that number.  The number of second mortgage holders who are underwater is simply much, much larger.

This news comes just as other reports show that Fannie Mae and Freddie Mac services have closed 28% fewer loan modifications this year than in the previous quarter of last year.  Services offered over 86,000 loan modifications during the first quarter of 2011, but overall the industry saw a decrease in available modifications over the 144,000 offered in the final quarter of last year.  These underwater homeowners may not be given access to the solutions they need.