Most Fresno Mortgages Are Underwater

Fresno, CA Nationwide, about 38% of all residential properties are in the same situation. That means more than 81,000 properties have negative equity in Fresno right now. In the entire state, 2.9 million are upside down.

For many of those homeowners, that means they're on the verge of foreclosure, but there are a few options to turn them back right side up. The dead grass in front of a home near Hayes and Herndon is a dead giveaway in an otherwise tidy northwest Fresno neighborhood: the home is in foreclosure. People started buying homes in the development four years ago at the market's peak.

"Anybody could buy a house," said David Schilling, from Fresno's Royal Charter Mortgage Company. "And everybody did. And everybody was riding that wave up. Their neighbor bought a house, their friend at work. They all wanted to do that."

But today, many of them are barely making their mortgage payments and a few of the homes are in foreclosure. Almost everybody owes more on their house than they could sell it for.

"In this particular neighborhood, I would say anyone who bought when this was at its peak is upside-down," said upside-down homeowner Benjamin Torralva.

Torralva has lost more than $100,000 in value on his home and he's upside-down, but he's also a realtor specializing in short sales. He's seen people stretch their budgets every way possible to stay in their homes, and then seen some of them lose the homes anyway. "Sometimes you steal from Peter to give to Paul and at the end you're only prolonging the inevitable," Torralva said. "Eventually, if you're not careful, or one false move will end you up in foreclosure."

There are a few options for people who are upside-down:

They can modify their loan if the bank will work with them.

The bank can also give them a forbearance, letting them skip the interest until the end of the loan.

Homeowners can also refinance, but only if they're not that far upside-down.

And they can walk away from their home and let their credit suffer.

Or they can just suck it up and keep paying, hoping for a rainbow at the end of the storm.

"They don't want their credit to suffer, so they keep paying their mortgage and they'll come out on the other side just fine," said Schilling. "It may be five or 10 years before they get equity back in there."

Many real estate experts say the market may not be at the bottom yet. They say that could come at the end of California's foreclosure moratorium in September.

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