According to an article in the Dallas Morning News, the number of Dallas-area residents who owe more than their houses are worth has grown to 21.1 percent. One out of every five Dallas-Fort Worth homeowners owe more on their home than it is worth.
The article said:
"The accelerating share of negative equity, combined with deteriorating economic conditions, means that mortgage risk will continue to increase until home prices and the economy begin to stabilize," Mark Fleming, chief economist for First American CoreLogic, said in the report
Homeowners with negative equity are at an increased risk of losing their home to foreclosure especially in an economic environment where millions of people have suffered job losses. In normal circumstances if a homeowner loses his/her job, he/she can sell the home to avoid foreclosure . But when a homeowner owes more on a home than it is worth, it becomes nearly impossible to sell the home in order to avoid foreclosure. Homeowners who have negative equity are literally "sitting ducks" waiting for any crisis to send them other the edge into foreclosure.
Bankruptcy is often the best recourse for homeowners facing foreclosure because they owe more than their home is worth. In bankruptcy, a homeowner can work with a bankruptcy attorney to figure out a plan of action to save their home and other assets. Also bankruptcy puts the brakes on the foreclosure process, giving the homeowner more time to figure out a solution.