These now have significant negative equity, thereby increasing the risk of foreclosure.
Even when "HAMP is running smoothly," Chen says, "rising negative equity and increasing job losses will make it impossible to halt the tidal wave this year, placing continued downward pressure on house prices".
Negative equity conditions significantly increase the chances that a borrower will default on a mortgage, creating a loss for the FHA.
Moreover, since it does nothing to address the negative equity of the homeowner, it increases the probability of secondary default if prices or owners' incomes continue to fall.
Negative equity combined with high unemployment greatly increases the risk of delinquencies and foreclosures, which, not surprisingly, continue to hit new highs.
Overwhelmingly we are employed in the private sector and so, in addition to staring at the ceiling each night worrying about negative equity and the looming flurry of tax increases, we fret whether we'll be in a job next month (with unemployment tipping 14%, our paranoia is justified).
"Home prices in the worst areas -- Florida, Nevada and Arizona -- fell more than we had expected, increasing the amount of negative equity," a First American senior economist, Sam Khater, said.
Connecticut, for example, saw a 25.0% increase in homes with negative equity, while the District of Columbia had a 44.0% rise.
Property prices have fallen by around 20% since their peak in autumn 2007, pushing an increasing number of households into negative equity; some reckon prices have the same again to fall.
The average fall in negative equity masked a decrease in the south of England and an increase in northern England and other parts of Britain.
Many people also have negative equity in their homes.Unemployment benefit has been made harder to get in many countries, which has increased the number of people claiming disability benefits.
