by Magdalena Rosova

More and more Americans are "under water" – they owe more on their mortgage then their house is worth.

About one in six American homeowners are in this unpleasant position and nearly 12 million of them owe more than their homes are worth. It was only 6.6 million homeowners at the end of last year.

If these homeowners´ houses go foreclosed, it would cause an oversupply of homes, add to pressure on banks and finally delay a recovery in the housing market.

The crisis affected consumer spending as people cannot maintain the standard of their lifestyles.

The reason why so many people got into trouble is that they had refinanced mortgages to pull out cash while risking their property. Lots of people ended in bankruptcy.

There are for-sale signs everywhere, oversupply of homes for sale caused house prices rapidly declined.

The American government pledged to recapitalize banks and buy debt from financial institutions. But some economists are afraid that crisis can be more costly to the taxpayers that the government.

The government has focused on rescuing banks and not on help for individuals. There is only program called the HOPE NOW that helped a few hundred thousand mortgage restructurings.

Presidential candidates both introduced plans for dealing with the crisis, but no one has appeared to have complete solution. There is no consensus about how best to help homeowners in dept.

Nearly one in three of people who have bought home since 2003, now have negative equity. About half of those who bought house in 2006, are now under water.


related story: http://www.istockanalyst.com/article/viewarticle+articleid_2724539.html

by Magdalena Rosova for PocketNews (http://pocketnews.tv)

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