Home Equity Stakes Stumped

Realty Times (06/10/08); Perkins, Broderick
The Federal Reserve's first-quarter Flow of Funds report shows that Americans' home equity fell to 46.2 percent in the first three months of this year, marking the fifth consecutive quarter that the rate was below the 50-percent threshold. Plunging residential values have left many owners with negative equity or what is known as "upside down" mortgages where they owe more than their home's value. Moody's Economy.com calculates that nearly 8.5 million homeowners had either negative or no equity in their homes at the end of the first quarter. In the hardest-hit areas of California, Florida, Michigan and Nevada, more than 50 percent of the homeowners who bought homes in 2006 now live with upside down mortgages.