According to a recent report on CBS news, 20 million households are about to be upside down on their mortgage. An upside down mortgage is when the home owner owes more on the house than it’s worth. The result of an upside down mortgage is usually that the homeowner takes a loss on the sale. The other choice is for the home to go into foreclosure. But it costs banks around $50,000 to foreclose on house. So many lenders don’t want to bother.

If 20 million is the correct figure, that means 43% of all mortgage holders would be stuck with upside down mortgages. Whether this number is correct. I’m not sure. What I do know is that the panic over current market values is causing prices to be lowered. Some experts have predicted that home prices will fall across the nation by 10%. And, as we’ve previously discussed, many homeowners are reacting to the fear simply walking away from the mortgages that they owe.

Because the market is no longer liquid, homes that still have homeowners living in them are sitting on the market far longer than before. Many homes are for sale on the market for a year or more. Those who are hurt the most by being upside down are:

• people who recently purchased their homes (in the last couple of years)
• people who have suffered a financial blow, like job loss
• people who are going through a divorce or other personal loss