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Miami Foreclosure Watch: 11 Million Properties in U.S. Have Negative Equity

A recent report by CoreLogic states that 10.9 million U.S. properties had negative equity, a leading cause of foreclosure in Miami.

Many people have been thrust into a difficult position because banks loaned out money for investment homes to people who couldn’t really afford the payments. Once those people defaulted on the loans when the market collapsed, everyone was in trouble.

Now, foreclosures clutter neighborhoods throughout Miami and South Florida and the values of homes have plummeted. Investors and first-time buyers snatch up houses that once sold for six figures but are now going for low five-figure numbers. Many continue to struggle with underwater mortgages. For people who must move for work, they are in a tough position. They can’t sell their homes, so they fall into foreclosure.

All of this has left many homeowners in a difficult position and in need of advice from an experienced Miami foreclosure defense lawyer. A foreclosure isn’t a foregone conclusion, as banks have the responsibility of proving who owns the note on the home and whether they have legal authority to actually foreclose. Many areas of a foreclosure must be challenged in order for a homeowner’s rights to be upheld.

According to the CoreLogic report, 22.5 percent of all residential properties with a mortgage were in negative equity by the end of 2011’s second quarter.

More than 2.4 million borrowers had less than five percent equity, which is called near-negative equity. Together, those two numbers accounted for 27.5 percent of all residential properties with a mortgage. Nearly two-thirds of homeowners are paying higher, above-market interest on their mortgages while they are in a negative equity situation.

According to CoreLogic, Florida ranks third in homeowners with negative equity, behind only Nevada and Arizona. According to the research, about 45 percent of all homeowners have negative equity, while another three percent have near negative equity.

While the statistics show that negative equity is on the decline, it’s likely because more homes are going into foreclosure and being taken away. The homeowners are choosing to walk away from their homes that may take decades to regain value and therefore the negative equity rates are falling. It by no means indicates that the market is getting better.

Strategic default is a risky move, but can work out for some homeowners if the situation is right. This means making a decision to stop making the payments and accepting the possible consequences, such as a default judgement.

A short sale is also an option in cases like these. If your house is worth far less than the loan you’re paying on, renting it isn’t plausible and you have little equity in the house, a short sale may work best for you. This means you find a buyer and offer the bank what the buyer is willing to spend and, in return, the bank drops the difference owed.

There are many options is cases of homeowners who are drowning in debt or who have a house that is far more of a liability than an investment at this point. Consider your options with an experienced Miami foreclosure defense attorney.

If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991.

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