Homeowners who have borrowed against their home's equity by taking out a second mortgage are 38% more likely to owe more than their homes are actually worth.
According to a report by CoreLogic the average person with a second mortage owes $83,000 in negative equity, while people who haven't borrowed against their homes value owe $52,000, a marked improvement.
A Moddy's economist says of the situation:
“When a homeowner’s house is underwater it’s harder to get a credit card or a car loan,” one Moody’s economist says. “There are all sorts of little, pernicious effects that you don’t necessarily think about.”
“I’m sweating. I have a broken car in my driveway I can’t afford to fix,” and “I’m hoping they don’t come after me for the money I owe them.”