Underwater homeowners nationwide are still in the millions despite what you may have heard or read about the real estate market comeback.  Although you may read reports that rising home prices are starting to get more homeowners out from underwater, there is more to this story. In the second quarter of this year, 26 percent of American homeowners owed more on their mortgages than their homes were worth. That’s down from 29 percent a year earlier.  Those 26% equate to about 12 million mortgage holders.  1 quarter of our nations homeowners are still underwater.  I don’t care what sort of rosy real estate comeback you think we have but as a whole, when ¼ of our nation is still underwater, our real estate market still has a lot of work to do.  Government sponsored programs were supposed to relieve these homeowners however these government programs couldn’t help those who had loans backed by private investors.  HARP 2 allows for underwater homeowners to refinance if the loan is backed by Fannie or Freddie.  If you have a FHA Loan or a VA Loan, you can use those underwater refinance programs to refinance your loan. HARP 3 was supposed to help homeowners with loans backed by private investors but the Senate and House won’t pass the bill despite the President’s will. Barack Obama in his State of the Union address said that he would pass a bill to help homeowners with loans backed by private investors.

And with the 30 year loan now averaging 4.5% (according to Freddie Mac), homeowners looking to refinance – even those who could reduce their rate and qualify for a government sponsored refinance – may not go forward as the cost is not justified.

Here are some numbers from 247WallSt.com: Here are some cities where the negative equity rate is quite alarming: The rate is 37% in Detroit; 36.1% in Riverside, Calif.; 31.3% in Phoenix; 36.3% in Tampa; 39.8% in Orlando; and 48.4% in Las Vegas. Almost half of the home loans in Vegas are still underwater! That’s incredible.  We need HARP 3 or another way to get these homeowners out of this situation if we want to have a true housing comeback.