40 Percent Of Milwaukee Homes Have Mortgages Larger Than Property’s Market Value

A new national report says 40 percent of the homes in Milwaukee are underwater in their mortgages.

An underwater mortgage is one that requires the homeowner to pay more than the fair market value of the house to pay off the loan. The report, from the University of California-Berkeley, identifies 11 zip codes in Milwaukee where at least a quarter of the houses have such mortgages. More than half the residents in those zip codes are black or Latino.

Jennifer Epps-Addison of the group Wisconsin Jobs Now says lenders like Freddie Mac and Fannie Mae have an obligation to help restore these neighborhoods.

“These folks were made whole through taxpayer bailouts and returned to profitable entities,” said Epps-Addison. “And yet we have done very little to make whole the homeowners who were taken advantage of – particularly homeowners of color who were sold bad loans.”

Milwaukee has already been working with some of the banks who own the underwater mortgages to prevent more foreclosures. Maria Piroletta of the Milwaukee Department of City Development says new foreclosure notices are already down by 50 percent from the 2009 level, but she says maintaining that trend is a slow process that involves working one-on-one with homeowners to help them renegotiate mortgages with banks that are often in different parts of the country.

“The reals estate market definitely has some time to recover yet, but it’s going to be a slow and steady recovery,” said Piroletta.

Advocates for more decisive action are calling for the city, Congress, and President Barack Obama to put more pressure on lenders to reduce underwater mortgages to fair market value and give those homeowners a chance to stay in their homes.