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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Others view their upside-down mortgage as a bad investment, and although they may have financial capacity, their willingness to resolve their issues is low so they opt to sit at home rent-free until they are forced to leave.
Such lenders' rights provide discipline to our housing market--Canadian borrowers think twice about buying more house than they need knowing their future earnings could be clawed back if they wash their hands of an upside-down mortgage.
The program would pay a civilian or a Soldier the difference between his home's selling price and 95 percent of its value on the BRAC announcement date, or pay off an upside-down mortgage, whichever was higher, and also pay the closing costs.
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.