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Indeed, despite recent increase in home prices, more 14 million homeowners across the country — or one in four people with a mortgage — are still making payments on financing that exceeds the value of their homes by more than $1 trillion, according to Zillow.
“Negative equity will remain a major factor in the market for the foreseeable future,” said Zillow’s chief economist, Stan Humphries.
For many, the best hope of relief is a loan modification that will adjust the terms of their mortgage to make their monthly payments more affordable. Those borrowers, however, are at the mercy of their lender and the seemingly endless number of people who are in charge of processing those requests.
And as Minnetonka’s Torberg knows all too well, that can be a tedious, emotionally draining process. Several months ago, she applied for loan modification, and each time she’s called to get an update, she’s been referred to a different case manager who asks her to call back for another update. The outcome is still uncertain, and so she’s working on coming to terms with the reality that she and her disabled adult son might have to move to a rental.
“My kids were born and raised here,” she said. “And it’ll be tough to leave.”
Thousands of Twin Cities homeowners have already been through that devastating process, and have gone through the short sale process or lost their home to foreclosure. Nearly one in three home sales last month was a distress sale.
And Wendy Haisley doesn’t expect the situation to get better any time soon. She’s a legal assistant for Markve & Zweifel, a local law firm that specializes in short sales. To meet demand, she’s watched the company grow from two employees to 18 in just three years, and growing number of calls are from people who through not fault of their own can no longer make that monthly mortgage payment.
“They can’t afford the home they could afford before the recession,” she said. “There are still a lot of people in trouble.”
Jim Buchta • 612-673-7376