Nearly 1 in 5 homes in US Rust Belt underwater

Global Business

Nearly 1 in 4 Rust Belt homeowners underwater

Despite a housing recovery across most of the United States, some areas continue to struggle. House prices have not gone up as high and as fast everywhere, leaving millions of homeowners underwater or owing more on their properties than what they paid.

CCTV America’s Roza Kazan takes a look.
Follow Roza Kazan on Twitter @rozakazancctv

Nearly 1 in 5 homes in US Rust Belt underwater

Data from Zillow shows that despite the housing recovery since the 2008 crash, 12.7 percent of all properties with a mortgage remain underwater. CCTV America's Roza Kazan reports.

Homeowner Donna Roop said she loves gardening and playing with her dog Buddy. But there is a lot on her mind these days.

Two years ago, she lost her lucrative job of 20 years as a sales rep at AT&T and is now struggling to keep her home.

“What do you do? No one is willing to help you — nobody,” Roop said.

Now, at age 53 and with a college education, she works part-time as a pool attendant earning just over $8 an hour.  To make matters worse, her house is underwater.

In 2003, she said she paid $130,000. Now her house is worth around $70,000.

Even she were to sell it, she would still owe the bank thousands of dollars.

“It’s been devastating,” Roop said.”Put a lot of work into the house, money, had a lot of plans, and always wanted to have my own house.”

But Roop is not alone. Data from Zillow, a housing research firm, shows that despite the housing recovery since the 2008 crash, 12.7 percent of all properties with a mortgage remain underwater.

Markets in the nation’s former industrial heartland are doing especially bad, with nearly a quarter of all underwater mortgages.

Chicago has now displaced Las Vegas as the city with the highest rate of negative equity, 20.3 percent. 

Matt Laricy, managing broker of Americorp Real Estate in Chicago, said stagnant wages and higher property taxes are hitting low-income areas the hardest.

“The south and the west side of the city [Chicago] seem to only keep getting worse — more and foreclosures coming up over there even though the market is turning, compared to the downtown market that seems to be booming,” Laricy said.

There is help for underwater borrowers whose loans are backed or guaranteed by government mortgage organizations. But for those with conventional loans, there is little or, in most cases, no help at all. It’s just between them and the banks. 

“If you are not one of those unfortunate people who doesn’t have that kind of loan, you are kind of stuck out in the wild,” Paul Stepanovich, Town Center Properties owner and real estate broker, said. “You really don’t have much options. You gotta hope and pray that the bank that services your loan is going want to work with you”

More often than not, they don’t. Roop’s bank refused to modify her loan four times. She’s now facing court proceedings, where, unable to afford an attorney, she’ll represent herself.

“I thought there was help out there, and there isn’t,” Roop said.