$715 billion is a lot of money.
That’s the estimated amount of “underwaterness” hobbling the housing sector in the fourth quarter. A mortgage is considered underwater when the amount of the loan is larger than the value of the underlying property, resulting in a negative equity position for the owner.
The more negative equity a homeowner has, the more likely the owner will default. The resulting foreclosures are a negative rippling through the entire recovery.
As Federal Reserve Chairman Ben Bernanke told Congress this week, “problems in U.S. housing and mortgage markets have continued to hold down not only construction and related industries, but also household wealth and confidence.”
Read the rest of the story at The Wall Street Journal
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