1 borrower Among 4 borrowers in underwater

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 26, 2009 -- Almost 1 in 4 borrowers underwater
Nearly one in four U.S. borrowers owe more on their mortgage than their home is worth, a worrisome sign that the housing recovery could be threatened by a wave of defaults, the Wall Street Journal reported on Tuesday.
The newspaper said almost 10.7 million households, or 23 percent of mortgage holders, were underwater in the third quarter, and 5.3 million have mortgages that are 20 percent higher than the value of their home as prices have plummeted since the recession began.

The report cited a survey by First American Core Logic, a Santa Ana, Calif.-based real estate information company, which said more than 520,000 of the borrowers have received a default notice. The summer's trend of rising home prices faded at the end of the traditional home shopping season, two reports Tuesday showed.
The Standard & Poor's/Case-Shiller home price index of 20 major cities rose only 0.3 percent to 144.96 in September, but it was the fourth straight monthly increase. The seasonally adjusted index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in April 2006.

Another reading of home prices by the Federal Housing Finance Agency held steady from August to September. Analysts expect prices to dip again this winter as foreclosures increase and economic growth remains modest. The government said Tuesday that the economy grew at a 2.8 percent rate last quarter — less than originally estimated. And forecasts for the next several months are no better. Unemployment, meanwhile, could rise from the current 10.2 percent to as high as 11 percent next year.
Home prices are a key ingredient to rebuilding the economy. Homeowners feel wealthier when their property appreciates in value and are more likely to spend money. Rising prices also help millions of homeowners who owe more to the bank than their homes are worth.
Spring and summer are typically the best times of the year for the housing market, because families prefer to move between school years. And this year's sales were aided by a tax credit for first-time buyers, which drove up sales nearly 30 percent between May and October.

In the winter months, fewer homeowners put their properties on the market. That means a bigger proportion of the sales will be foreclosures. Last winter sales of foreclosures and other distressed properties made up about half of all sales in February and March, compared with about a third over the summer, according to the National Association of Realtors.
With those low-priced properties dominating sales, Barclays Capital economist Michelle Meyer forecasts an 8 percent drop in prices before they hit bottom next spring, but said, "I don't expect another freefall."
The Commerce Department on Wednesday will release new home sales data for October. Economists expect a 2 percent increase from September to an annualized rate of 410,000, according to Thomson Reuters.
The Wall Street Journal, citing U.S. Census Bureau d