Upside Down Mortgage

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Upside Down Mortgage

A mortgage in which the amount that a property owner owes on the loan is more than that property's current market value. For example, if one borrows $100,000 to buy a house and, for whatever reason, the value immediately drops to $60,000, the homeowner is said to have an upside down mortgage. Upside down mortgages are most common after the burst of an asset bubble.
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The nation's housing market is slowly improving, but many Americans continue to struggle with upside-down mortgages -- owing more on their homes than they are worth.
Cash-strapped homeowners are staying put in their homes or taking a loss on their upside-down mortgages and moving back in with their parents to raise their families.
Additionally, it is believed that to the extent that this stimulates investments in home improvements, it will enhance home values and help close the gap on upside-down mortgages and shrinking home values that are a major cause of our current economic problems.