Economy forces many mortgages ‘underwater’

People are having to deal with mortgage problems in these difficult economic times.

People are having to deal with mortgage problems in these difficult economic times.

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[audio: 091204tmmortgage.mp3]

A mortgage goes underwater when the value of the home drops below the amount of the loan. Tom DelCorio is a South Jersey mortgage broker who has been in the business for 25 years. He says more people are struggling to keep their homes at a time when their property values are declining.

DelCorio: Especially on investment properties, that’s why it’s been so difficult on investment property to get loans on investment properties, an example is that even an owner occupied duplex now requires 20% down. Even if you are going to live in the property, it used to require 5% down if you were going to physically live in the property.

The Philadelphia region is faring better than the rest of the country. A report by Deutsche Bank says up to 25 million American homeowners could eventually owe more than their house is worth. That would account for 48% of all mortgage holders. Underwater borrowers can apply for help through the federal government’s loan modification program.