Gulping For Air Until 2015

San Fernando Valley Homeowners will be holding their breath until 2015 according to First American CoreLogic as positive Equity Won’t Return For Most Underwater Borrowers for about five years.

First American CoreLogic estimates that the typical US homeowner who has negative equity in their property will not experience positive equity until late 2015 to early 2016.  CoreLogic projects more than 11.3m, or 24% of all residential properties with mortgages had negative equity at the end of the fourth quarter 2009. While the largest decreases in home prices appears to have already happened, it remains to be seen when borrowers will return to positive equity.

To predict how long borrowers will remain in a negative equity position, CoreLogic projected future home values and unpaid principal balances to gauge how long it will take for the average underwater borrower to return to positive equity.

According to the projections, it will take the typical borrower until late 2015 or early 2016 for negative equity to disappear.  Negative equity is widely considered a trigger to strategic default, and a Treasury Department program announced Friday attempts to address the problem by pushing lenders and servicers to offer borrowers principal reductions on their mortgages.

Although house price appreciation will, over time, offset negative equity, amortization, the paying down of loan balances, will in most cases be a more significant remedy to negative equity, a research note from CoreLogic economists states. Over the next 10 years, the average loan balance will decrease by an annual rate of 3.3%; meanwhile home price are expected to increase at a 3% annual rate over the next decade.

If five years seems like a long time to be holding your breath, call or email Tracey Thomas to find out your options.  There are programs available to help underwater homeowners such as loan modifications, short sales and owner financing.  Our team specializes in solutions for distressed and underwater homeowners in Woodland Hills, West Hills, Tarzana, Encino, Sherman Oaks, Granada Hills, Chatsworth, Northridge and most of the San Fernando Valley.  Please call 818-652-2937 now for more informtaion.