1 In 5 Homeowners Underwater on Mortgage

Less we forget what Republican economic policies have wrought, this article from Reuters is a good reminder. Roughly 20% of homeowners now find themselves owing more on their mortgages than their homes are worth in today's real estate market. Yet McSenile wonders why confidence is down and the GOP brand is about as popular as poison with many voters. The deregulation mantra has certainly yielded a heavy, heavy cost. To make matters worse, some project the number of homeowners with such upside down loans may increase to 1 in 4. Of course as property values fall, municipal revenues based on tax assessments will follow and create more downward pressure on the economy. The next president has a terrible hole to dig the country out of compliments of the Chimperator and a GOP controlled Congress until January 20, 2007. Here are some highlights:

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NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows. About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.

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Seven hard-hit states -- Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio -- had 64 percent of all "underwater" borrowers, but just 41 percent of U.S. mortgages. This is very much a regional problem, and people tend to forget that," said David Wyss, chief economist at Standard & Poor's, who expects home prices nationwide to fall another 10 percent before bottoming late next year.

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JPMorgan Chase & Co, one of the biggest mortgage lenders, on Friday offered to modify $70 billion of mortgages to keep a potential 400,000 homeowners out of foreclosure. Bank of America Corp, which bought Countrywide Financial Corp in July, also has a large loan modification program.

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Last week, Wachovia Corp said borrowers with its "Pick-a-Pay" ARMs and living in or near Stockton and Merced, California, owed at least 55 percent more on their mortgages, on average, than their homes were worth.