Vicky Dicristo, 64, bought her home in Soquel, Calif., in 2006 for $535,000 with plans to fix it up, live in it awhile, then sell and buy a nice retirement home in Arizona, where she has family. She bought the home with a five-year, interest-only, adjustable-rate mortgage at a 5.9% interest rate.
Her home is now worth $350,000, according to the local assessor's office. And Dicristo, who was laid off nearly two years ago from her job as a mortgage loan underwriter, has lost the $135,000 she put down on the house as well as the more than $15,000 she put into renovating the home with new floors.
"I lost $150,000," Dicristo says. "I haven't been able to make payments, either. I thought I was going to be able to sell it and move to a less expensive area. That had been my plan when I bought it, to move to someplace like Arizona and pay all cash. But that whole plan fell apart."
Dicristo is in growing company. About 24% of all residential properties with mortgages had negative equity at the end of 2009, according to First American CoreLogic. That's up from 10.7 million and 23% at the end of September.
Dicristo can't sell her home and move, but she may be forced to leave. She no longer can afford the payments on her home and expects to be foreclosed upon.
She's living on Social Security and unemployment and drawing $800 a month from her $200,000 retirement account, but she says she has no choice but to walk away from her current home.
Her credit score had been close to a sterling 800, reflecting the type of borrower many banks would lend to at low interest rates. Because she's been unable to make her mortgage payments, she believes her credit score has sunk to about 500, a score that would make it difficult for her to get a home loan.
