Are you sinking underwater with your mortgage?

11.04.08
By Lewis Green

Approximately 7.5 million Americans are in a precarious position - their homes are worth less than the amount they owe on their mortgage.

If you are one of the homeowners identified by First American CoreLogic as being "underwater," you'd better think twice about putting a "For Sale" sign on your front lawn.

Even if you don't have plans to sell in the near future, the repercussions of having negative equity could be dangerous, particularly if you are struggling to meet your mortgage payments.

"Being underwater leaves homeowners vulnerable to foreclosure," CoreLogic's Mark Fleming told CNN Money.

Usually, borrowers who hit rocky waters with their home loan payments choose to refinance or take out a home equity loan. But if your home's worth has fallen to this extent, these options are not within your reach.

Recent figures from RealtyTrac indicated that more Americans are at risk of having their home foreclosed. Foreclosure filings increased by 71 percent last quarter to reach a record number of 765,558, the company said.

If these figures send a chill down your spine, remember that you can take steps to prevent a tough situation from reaching this point.

Experts suggest that if you are at risk of falling behind on your mortgage, you should act quickly to discuss the situation with your lender. Many banks and financial institutions will be open to working out an alternative payment option that can help you keep your home.

One big lender, JP Morgan Chase, recently announced that it will be modifying the mortgages of around 400,000 homeowners who are at risk of foreclosure.

The bank also said that it would suspend new foreclosures for the next 90 days while it focuses on helping borrowers.

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Many people owe more than their homes are worth