Fewer metro Atlanta homeowners ‘underwater’ on mortgages

Follow us on Twitter @AJCBiz

Many metro Atlantans and Georgians continue to be stuck with properties that are worth less than the outstanding loans on them, but the good news is that fewer properties locally and nationally are dealing with negative equity.

In the last three months of 2012, Georgia again ranked fourth in the nation in percentage of mortgaged properties that were “underwater,” with 34 percent falling in that category, according to research at CoreLogic.

The finding, however, was a slight improvement from the 35 percent of underwater properties in the third quarter, when the state also ranked fourth.

Metro Atlanta ranked third in underwater properties among the 25 largest metropolitan areas in the country, CoreLogic reported.

“The scourge of negative equity continues to recede across the country,” CoreLogic Chief Executive Officer Anand Nallathambi said in a statement. “The trend toward more homeowners moving back into positive equity territory should continue in 2013.”

Negative equity is keeping many homeowners from putting their properties on the market, and that has contributed to a decline in the number of homes for sale in metro Atlanta. Listings in metro Atlanta were down 32 percent in February, compared with the same month in 2012, according to Zillow.com.

On the upside, the drop in inventory eventually will drive up home values in many markets, Zillow chief economist Stan Humphries said recently. “As home values rise, some homeowners will be freed from negative equity and able to list their homes, which will contribute to an easing of the inventory crunch.”

Nationally, 10.4 million, or 21.5 percent of all residential properties with a mortgage, were still in negative equity at the end of the fourth quarter of 2012, CoreLogic said, but that figure is down from 10.6 million properties, or 22 percent, at the end of the third quarter of 2012.

Half of the mortgaged properties in Nevada were underwater, giving the state the dubious No. 1 spot, followed by Florida and Arizona.

Is negative equity standing in the way of your desire to sell your home?

44 comments Add your comment

Bernie

March 19th, 2013
1:55 pm

The reason is simple…The vast majority of them…Have already DROWNED!

TR

March 19th, 2013
2:30 pm

I was way underwater. I finally “walked away” from my home after paying cash for a cheap fixer upper bungalow in up and coming area of city. can you say ” No Mortgage?”

Ron Mexico

March 19th, 2013
2:49 pm

^^^doesn’t “up and coming” mean crappy?^^^

PC

March 19th, 2013
2:55 pm

Hate that walking away from a contract you’ve signed and a debt that you was even an option.
I have friends that have done this and they’re lesser in my eyes for having done so. I also have friends that are sticking it out or going the short sale route. THESE people I still respect.

Needed help once

March 19th, 2013
3:02 pm

You can’t judge until and unless you have been there yourself. I once did and then I got in that place. You never know what you will do or will have to do until….

Greg

March 19th, 2013
3:06 pm

PC: Where’s outrage at the Wall Street banks that caused this entire mess, walked away with tremendous wealth, got bailed out by the taxpayers and are poised to do it all over again? I’m glad TR was able to walk away though his credit is probably ruined for a long time and I don’t see him in any lessor light. The “little” guy always gets screwed while all but one of the banks got bailed out with executives walking away with multi million dollar bonuses and not one person in jail.

here we go again........

March 19th, 2013
3:08 pm

I can say “No Mortgage” and did not “walk away” and screw the folks I had made a promise to pay back………I can say “No Mortgage” and look folks in the face as I say it nor do I have to walk to the corner at a social gathering to avoid the folks I did not pay as I promised……….I am just saying………….and to be clear, I am not talking about people who “lost” their homes busting their a** to keep them! There is a difference!

Jacob

March 19th, 2013
3:08 pm

Banks are holding on to millions of homes throughout the country by not foreclosing on them. My neighbor has not paid his mortgage in last 3 years now & living for free! Why not, though it is in foreclosure he has been officially kicked-out. All the cheering news by NAR & media is all bogus. Majority of the homes are bought by investor groups like Blackstone which they rent hoping the prices would go up & then sell them. But what has happened now with millions of homes for rent competing with apartments in the rental market is putting downward pressure on rent. Eventually the investors will have no choice but start dumping these homes at lower price to cut there loss. At the same time the banks holding on to homes by not foreclosing will see this & start foreclosing which will slash prices even more. For now because of political pressure they cannot foreclose easily. In short, there is no real recovery in the housing market, just a temporary boost by Fed induced money printing which has got the stock market also rising. Ultimately millions will loose there savings once the selling starts. Somebody has to pay the Piper & you know who that will be – average decent Americans.

Beamy

March 19th, 2013
3:39 pm

Can’t see walking away even though my house is underwater. I would still have to live somewhere, and still have to come up with money for a roof over my head, whether it be owned or rented. My mortgage costs the same as rent. Might as well stick it out. I like where I live. Housing prices within the perimeter will eventually rise again, as the demand will be there. Before I know it, the house will be above water, and I’ll be paying a lesser mortgage payment after the recast we have planned. In fact, my house might even be paid off by then. A little imagination and hard work goes a long way toward such a thing.

chet

March 19th, 2013
3:42 pm

I bet that PC is a customer of one of those banks that got Federal (our monies) aide. So should I think lessor of PC? You be the judge of that one. I know I created my monies problems and was able to fix them on my own. And the little bank I bank with did not get Federal aide for me to ask for assistance. So PC when I see you in the rain with the flat tire on the side of the road and you made the mistake of getting the flat in your trunk fixed. I will have compassion to stop to help you, because I don’t judge those that one day I may be there. Did you ever ask your friend at the time that you could help them with their problem? Think about being a positive person than a lessor thinker PC of what the whole world is having problems with.

Hmmmmmmm

March 19th, 2013
3:56 pm

I have NO idea where this guy gets his data….. But he must work for the same government that pukes up the unemployment rate every month… Christopher, get off the alcohol. A mind is a terrible thing to waste!

Hmmmmmmm

March 19th, 2013
4:00 pm

@PC

Are you really that THICK…. These banks are NOT doing you any favors… You need to get off your HIGH HORSE!

Matt321

March 19th, 2013
4:02 pm

Walking away from an underwater loan is a rational behavior that we would expect any person to do. Publicly traded businesses do it all the time – if they didn’t, their shareholders would revolt. It’s very simple. First you, your bank, and an independent appraiser agree that a house is worth so many dollars. A bank agrees to loan you money to buy a house. You agree to pay them back. The bank keeps a security interest in the house, in case the borrower does not pay back the lender. However, due to the housing market collapse, you are now paying the bank a $150,000 mortgage for a $100,000 house. You are paying far more for an asset than it is worth. The sensible thing to do is to mail in your keys.

Now, it’s not as simple as that, because the bank can still come in and sue you for the difference (and just because you know someone who hasn’t been sued, it just means they haven’t been sued YET – the bank will try to recoup its losses if possible). But there’s nothing immoral about refusing to overpay for the house itself. If there’s anything immoral, it’s the system that lets the lender sue the borrower, when the lender was ALSO wrong in its valuation of the house. If we really wanted to fix the problem, they would have changed bankruptcy rules so that judges could write down the value of homes. Under this solution, the borrower takes a hit (declaring bankruptcy hurts their credit for years) and the lender takes a hit (they are forced to accept a write down). Of course, “cram-down,” as it was called, was never seriously considered, because the banks own the House and Senate. Sad.

Pay Mine for Me

March 19th, 2013
4:05 pm

PC, if you feel that way about people walking away from a debt or mortgage You sould be so kind and pay the mortgage for them. I am sure you would not be lesser in their eyes.

Hmmmmmmm

March 19th, 2013
4:05 pm

Thanks Matt321,

I’m really not sure that people like PC will even understand how corrupt and leveraged towards the banks and attorneys that the system is skewed… It’s not just sad, but should be criminal!

Shortseller

March 19th, 2013
4:24 pm

I’m currently completing a short sale. Just waiting for HUD approval to close.

In my case, I bought for $274k in 2006 at the peak. Then, add in a divorce, a 2nd custody motion a year later, child support, and hordes of expenses that I didn’t have an inkling of when I bought the house, and I’m out of savings and paying $1500 a month high expenses than when I bought the home. I’ve just plain ran out of money waiting for thing to recover, when they only keep sinking. The bank approved offer I have is a cash offer for $165k. I had a chance to walk away 4 years ago and didn’t. I’d be in a position to buy a house again soon at rock bottom prices if I’d done it. I’d also be in much better shape financially right now. I can also go rent a house the same size, same number of beds and baths, etc. for about $800 a less per month than my mortgage. Which I’m going to do, and use the savings to pay off divorce debt that I still haven’t been able to make much of a dent in.

And know what? If HUD doesn’t approve this sale, I’m walking anyway. Deed in Lieu to the bank. I literally am broke and can’t keep the house now. Out of savings, in debt, and expenses are higher than income. Some might question or look down on me, but I know I did all I could to keep from doing this, but in the end, I just can’t avoid it right now. I’m just hoping to avoid bankruptcy because if I’ll be able to afford to buy a new house in a 2 years or so, but won’t be able to make the deal that soon w/ a bankruptcy on my credit.

Anyway, after my own experiences, I don’t think I’ll ever judge someone that “walked away” badly. You never know what they’ve been through. I’d be so much better off today if I’d gotten out of this house one way or another when I had the chance to walk the first. Wish I’d done it.

Andy

March 19th, 2013
4:30 pm

It’s a shame they didn’t 1099 the deadbeats who intentionally walked away. The good news is many 2nd mortgage companies were still able to go after these low lifes.

MANGLER

March 19th, 2013
4:30 pm

Walking away from a house because it is worth less than you agreed to pay for it is different than walking away from a house because your income changed and you can no longer afford it. The banks should aggressively pursue speculators and people who owned multiple properties as investments and then decided to walk since they suddenly couldn’t turn them for a quick buck. Too bad. The stock market doesn’t guarantee that you always make a profit, neither does gambling, which is essentially what buying property as an investment and not as a home is doing. The families that were truly struggling due to job loss or medical expenses or natural disaster (you know, the non greed related reasons that do actually sometimes cause people to lose a home) get to deal with the credit and sometimes social fallout of foreclosure, only it tends to sting them a little more than Johnny Investor.

Timmy

March 19th, 2013
4:36 pm

Beamy nailed it. You gotta live somewhere; might as well make the best of it. Yep…

Matt321

March 19th, 2013
4:39 pm

@Mangler – but what you’re missing is that the BANKS were the ones doing the speculating. The banks made lots and lots of risky loans – they were gambling that the people they were lending money to would be able to pay them back. This worked as long as housing prices kept going up in a speculative bubble (which the behavior of the banks helped along), but when the bubble popped, it all fell apart. The gambles the banks made didn’t work out. Banks are not guaranteed profits, either. Yet they got bailed out, while the average homeowner was told to deal with it.

Funkisha

March 19th, 2013
4:40 pm

Before you conclude that you’re underwater first determine the actual value of your property.

Buddy of mine is in the process of refinancing his mortgage. On the first try his prospective lender said no dice, your property is worth less (based on the county tax valuation, if you can believe that) than your mortgage. Then he gets a proper appraisal which indicates the value is substantially above the mortgage balance, and now two lenders are bidding against each other to do his re-fi.

spotman

March 19th, 2013
4:49 pm

My father was a banker for 30 + years before he died. He always said one day there would be one bank in this country and the government would own it. Well they may not own them they sure are telling them what to do.

Best Decision Ever

March 19th, 2013
4:50 pm

Bought a 300K home at its peak. Short sale approved for $175K. Best decision ever! When your investment tanks, you sell. After all was said and done, the bank STILL made $30K and 2 realtors walked away with nice paychecks too! If we stayed in the home for 30years it would have cost us $800K. That is just stupid. We rent now a condo 1/4th the size of our old home, 100% debt free and take all the tens of thousands of dollars we would have spent renovating, tool buying, fixing, maintaining into a savings account. Bad investments happen, the market “happens”, what you do when things change matters. In just 11 months we have set up college funds for the kids and spend a lot more time with our family.

In regards to contracts that were signed and then broken. How many millions of employees go to work everyday and then are let go, downsized, pensions & health care taken away? What happens to the business owners? Do you sue them because there was a contract? Force them to pay you because they were promised regardless if they have the money? Why is it that all middleclass families cant break contracts, but rich people and banks do it all the time? Our lawyer informed us that banks prey on the fact that most homeowners feel bad, feel obligated, have feelings and are embarrassed that they are backing out of a contract. He assured us that banks and other corporations feel NOTHING!

Every realtor told us to stay in our home or shortsale. Our attorney laughed and said walk away! We still did the short sale because we felt bad. :)

RickInGrayson

March 19th, 2013
4:51 pm

I don’t expect home prices to rise too much. Not many people getting big raises. Most people who have lost jobs and found new ones…are working for less money.

Of course, inflation will cause “prices” to rise, but raises won’t keep up with inflation.

I don’t see how builders can construct new housing units for anywhere near the cost of such units only 5 or 6 years ago. Global competition for construction materials will not slacken. Looks like the US will be granting an amnesty to illegal aliens so pressure will placed on housing…but where will all the jobs come from…we are shipping jobs overseas to workers in low wage economies and providing H1-B and other types of visas for foreigners to take jobs here in the US!

PC is Right

March 19th, 2013
4:51 pm

The banks were bailed out, many against their will, and they paid back ALL the money forced on them WITH INTEREST. Anyone that walks away IS scum. If you break the law or cost me money, long or short term, then we can JUDGE YOU ALL WE WANT. People that walk away owe consumers for increased costs. Karma. :)

Best Decision Ever

March 19th, 2013
4:53 pm

Oh, I forgot – I am a loser and should have never bought a house I could not afford. What a dummy!

XYZ

March 19th, 2013
5:01 pm

“the banks own the House and Senate”

That is too funny! I guess Matt is typical and refuses to accept that it is the Federal Government that tells the Banks what to do, not the other way around. Wow! Americans are stupid!

the children

March 19th, 2013
5:16 pm

If you walk away from your home, think of the lesson you are teaching your children. You are teaching them to lie, cheat and steal – because that is what walking away is. It is basically financial FRAUD. The audacity a lowly individual can financially compare themselves to a large company is narcissism. What goes around comes around for everyone. No wonder the rich get richer and the poor get poor. Walking away brands you for life.

Matt321

March 19th, 2013
5:18 pm

@XYZ – Research the concept of “regulatory capture.” Also, I was paraphrasing US Senator Dick Durbin, circa 2009, when he said “The banks are still the most powerful lobby on Capitol Hill and they frankly own the place.” You can listen to the clip yourself – it’s on Youtube.

LawGuy

March 19th, 2013
5:19 pm

To all the idiots who don’t know what “walking away” is: A mortgage on your home is a contract just like any other. Banks enter into contracts all the time, and when the contract is no longer in their best interest, they walk away from them (and take whatever consequences they must). A contract is not a moral obligation as some have suggested, it is a business obligation. The contract can have negative consequences if you don’t fulfill your end of the bargain, but that doesn’t mean you are a bad person for taking that route. When you walk away from a mortgage loan, the bank retains your home (which is a valuable asset). Not only did the borrower enter into a risky contract, but the bank also entered into the contract, taking the risk that someone would not fulfill their obligation. A bank knows the risks involved and if they made bad loans on overinflated home values, they deserve to be stuck with the consequences of their contract just like the borrower. To suggest that a person should put their entire financial life in jeopardy to fulfill a simple business contract is ludicrous. Free market system is based around freedom to contract. You might say our free market system is to blame (although I am a strong believer in the our free market system)

Hooty Goot

March 19th, 2013
5:25 pm

I wish I’d never heard of Citi Group. Somebody in that organization should be doing hard time in prison!

MysteryMoves

March 19th, 2013
5:38 pm

The answer is clear unless you are born again GOP redneck.

Stop issuing building permits like it was 200 oz soda. GOP love to say how much they despise tax, yet love tax revenue.

GOP are satisfied until every inch of GODS creations is paved and taxed!

LawGuy

March 19th, 2013
5:55 pm

@MysteryMoves – WTF? This is not a partisan issue, housing crisis affected both liberal and conservative and was created by both liberal and conservative on Wall Street. But, since you want to make it a political issue:

What do you think the stimulus package (pushed through by President Obama, who is consequently pushing for another stimulus in 2013) paid for? Was it infrastructure spending, roads, bridges, housing subsidies? Yes, it was. And if you want to take it back even further, which administration pushed the idea that every low income family in America should be able to own their own home? Oh yes, it was the Clinton administration, who subsequently pushed the arrangement between Fannie/Freddie and the Large banks to buy Mortgage backed securities like they were going out of style.

Take off your blinders dude, not everything is partisan. Housing crisis was a collective mistake.

Chris

March 19th, 2013
6:01 pm

Uh, YEAH… I drank the Kool Aid and build OTP before the bubble burst – that’s Outside The Perimeter for those not familiar with the term, and ALL the development since the Great Recession housing crash has been in the Inner Core; makes for a ton of zombie homeowners still out here…

Tarheel JD

March 19th, 2013
8:14 pm

“The contract can have negative consequences if you don’t fulfill your end of the bargain, but that doesn’t mean you are a bad person for taking that route.”

The overwhelming majority of homeowners that continue to do the right things will see fit to make sure anyone that walked away pays dearly for the rest of their lives. The tide will turn where our entitlement / instant gratification society will pay for their financial ineptness. Enjoy the temporary relief from walking away because you will continue to hit financial roadblocks for the rest of your life.

Comparing yourselves to large businesses that balk on failed investments is hysterical. Reality will slap you in the face in the not too distant future.

Hmmmmmmm

March 19th, 2013
8:35 pm

It’s hilarious that some people think these banks paid back the money….. This blog is better than Saturday Night Live…..

Best Decision Ever

March 19th, 2013
9:17 pm

We didn’t buy a house we could not afford. We were promised by our employers raises and after 5 years and they never came, we were short an additional 40K in raises alone, so the business was not able to fullfil their obligations, so in turn we too were not.

Wandering Tao

March 20th, 2013
5:27 am

Too Big To Fail banks continue to be subsidized by the Fed giving them near zero interest loans, which they use to buy Treasuries @ 2%. The losers are seniors and others who are punished for a lifetime of saving by having to choose between CD rates well under the inflation rate or risking our retirement money in the stock market. TBTF banks reckless, irresponsible and often illegal actions were a major cause of our Great Recession and are a continuing obstacle to our recovery. The last time this happened, the Great Depression, laws were passed to prevent banks from speculating with taxpayer guaranteed funds. In the irrational exuberance for the “magic of the marketplace “in the 1990’s those laws were repealed. FDR assessment was accurate then, and now.

“A small group had concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor – other people’s lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.”

Yessssssss

March 20th, 2013
8:25 am

Hmmmmmmm lies – “It’s hilarious that some people think these banks paid back the money”
——————————————————

You might want to do a little research before you continue with your delusions. No wonder you lost your home and can’t pay your bills.

Even Barack Obama has been forced to admit banks paid back their TARP money.

http://www.politifact.com/new-hampshire/statements/2012/oct/25/barack-obama/barack-obama-says-banks-paid-back-all-federal-bail/

@ Best Decision Ever

March 20th, 2013
8:34 am

You DID buy a house you could not afford. You ASSUMED you would get raises which means you don’t live within your income level. With that kind of attitude, no one employer in their right mind would just give you a raise. You are responsible for your financial failures, not your ex-employer.

It is a disgrace that your attitude is rubbing off on your family. You are raising kids that will use the same excuses you do. There crimes will be worse, and society will blame you. Your own worst enemy is the one that stares back at you in the mirror every day.

And you wonder why people will continue to mock you and look down on you. You do it to yourself, so why shouldn’t we? Society treats you the way you treat yourself.

rojer

March 20th, 2013
9:38 am

Both are right. It is a contract and both parties can default on that contract if they deem it to be in their best interest. Problem is that generally the banks and the government havent been tough enough on the defaulting parties (generally the homeowners but sometimes the banks). The banks rarely go after the homeowners for deficiency judgments (only have 30 days post foreclosure to file if I recall) and the government has been forgiving the 1099 discharge of indebtedness income. If the banks and the government would have pursued those more frequently then the equation of what is in a defaulting parties best interest would change and people wouldnt walk away as often.

That said, I agree that these folk should be punished financially in the future. Hope that the banks and credit agencies dont forget that these folks reneged on their word and shouldnt be trusted to enter other contracts. Of course, they will forget. But I do bear some resentment that my mortgage hasnt been written down and that my property is underwater and that I cant sell or refinance because ive chosen to honor my agreements. Granted, ive chosen that route because its in my best interest and others situations may not be the same and it may be in their best interest. But still, there should be ramifications. These folks should not be competing with me for credit in the future.

08fx4

March 20th, 2013
10:21 am

So by reading everyone’s comments, I am still lost as to why one might feel they can or should walk away because the value dropped. The fact is, at some point you felt like shopping for a home. You then found a home and determined that you did not have enough money in your bank account to purchase the home from the current owner, so you went to a bank to loan the money. The bank doesn’t make a loan with a promise that your “investment” is sound. They make a loan to make money off of interest.

To put this into perspective, imagine if you bought a car. A few months after you purchased the car gas prices spiked and the value of your car tanked because of the higher gas prices. Based on some opinions here, I guess you all would expect the car dealer to give you a refund ?

All the banks did was front you money to buy a home that YOU wanted. You weren’t forced to make the purchase. Situations arise that make walking away a valid option, loss of value because of market conditions is not one of them.

Deep Thoughts

March 20th, 2013
11:25 am

These same evil banks that forced you to buy a home, are now letting you walk away? You do realize that you are trusting the exact same people? How can you trust them again and think that you can sit back and get away with cheating your next door neighbors, family and friends? Banks, lawyers, RE agents, and last but not least the Feds. They are all telling you what to do again – and you actually believe them. Wow, just WOW!

KC

March 21st, 2013
1:32 pm

I’ve not walked away from my home but I can’t say it hasn’t crossed my mind. My husband has been layed of twice in the last 3 years. Our income has dropped by more than half yet we have struggled every month to hand that payment to our bank. I went into this huge bank several months back requesting a modification. We are at 8.9% on a 300k mortgage and I was asking to get it down to at least 6% so that we could pay the payment and still buy groceries. The bank refused. Our home is not underwater like many yet they refused it because of my husband being unemployed. What I don’t understand is that even though he isn’t working, we have still kept the payments current every month. I asked them why they wouldn’t consider to refi a loan they already had that was being paid to assure them that we could maintain our obligation to them. Their answer was “We don’t have any programs that fit your situation”. My understanding was “Yeah, I’m the wrong color and my payments are current so why would you”? Now I have a screw BB&T Bank attitude and I could really care less about MY obligation to them. I’m only staying to protect my financial future, not theirs.