Negative Home Equity Rates Rise

According to Zillow.com and reported in the WSJ, the threat of homeowners walking away from their mortgages has increased because of negative equity. Arguably, if people owe more on their mortgage than the property is worth, they have an incentive to let the house be foreclosed upon. For buyers of homes in 2006, a whopping 39% had negative equity in 2007. Just as bad, for the median 2006 buyer, he or she had only 5% equity, which is surprising since the median downpayment in 2006 had been 10% downpayment.