Underwater Borrowers
While the real-estate market is gaining at the fastest pace since the height of the boom, the share of borrowers who owe more than their homes are worth was about 20 percent in the first quarter, down from 23 percent at the end of 2011, according to CoreLogic Inc. There’s a larger group that lack the 20 percent equity needed for a traditional refinancing.
In the first-quarter, the median price for a single-family home in metropolitan Portland gained 22 percent, about twice the national pace, according to the National Association of Realtors. Still, values there remain more than 20 percent below a 2007 peak. Someone who bought a $350,000 home then could be about $77,000 underwater today.
Someone who got a $350,000 mortgage in Phoenix that year probably is now more than $150,000 underwater, despite this year’s surge in prices. A borrower would have to contribute that amount of cash plus the funds needed to get a 20 percent equity stake to qualify for a non-Harp refinance.
Not Everyone
“People seem to think that because prices have gained, it means everyone is above water now, or close to it,” said Matt McHugh, a mortgage broker at Alliance Capital Partners in Portland. “It shows an amazing lack of understanding of what happened in these hardest-hit markets.”
Travis, the 57-year-old trucker, who bought his home in St. Helens, Oregon, in 2006 for $138,500 using a subprime mortgage, said he has been trying to refinance for two years without success.
“I have a good income, and I have a good credit score, but that won’t do me any good because I’m still $27,000 underwater,” said Travis. “No one will talk to me.”