Down But Not Out: Underwater mortgages

Lisa Apolinski faced a rude awakening when she went to refinance her home in 2008. "The lender told me my home was worth $225,000. I asked him if he had the correct house," Apolinski told Yahoo News.

The lender's reply? "You are underwater," he said, according to Apolinski. Her home has risen in value since then—to $316,000—but is still worth less than what she owes on her mortgage.

In the second quarter of 2012, U.S. home values rose by the largest percentage in seven years. Still, more than 11 million Americans owe more on their homes than the properties are currently worth. We asked Yahoo readers whose mortgages were underwater to share their stories and put together a slideshow of their stories. Of those who wrote in, all had purchased in the '00s.

Yahoo readers cited a combination of naiveté, excess hope and the easy availability of financing in saddling them with an underwater mortgage. "In retrospect, I really did not make enough money to afford my own home, but many creative financing options were available to first-time buyers that summer," writes Carla Prada Akers.

Christy Carmody of North Las Vegas concurred: "I had some trepidation about the high 7.125 percent interest rate on our loan, but was assured by our Countrywide representative that it was because we still owned our first house, and once we sold that, we could easily refinance our loan at a lower rate. I now know that should have been a warning sign of predatory lending, but at the time it seemed very plausible."

Still, others say they bought exactly what they could afford, and watched in dismay as what they hoped would be an investment turned sour. Ben Wilson of Verona, Pa., is frustrated at his inability to refinance his home given that he has faithfully made payments. "I cringe every time I hear a story about a bank or the government helping nonresponsible homeowners or banks. We bought what we could afford," and now, he adds, despite his good choices he is stuck.

Some shared that they have had moments of hope over the last decade: "Value of our home went up in 2008 and 2009 to $136,500.00 and right back down to $125,600 in 2011 assessment," writes Susan Asher-Dann of Avon, Ind.

Kathy Sloan of Rutland, Mass., says the diminished value of her home doesn't bother her as much as the overall state of the economy, which has diminished her discretionary income. "I'm not sure if we had equity in the house that it would change anything for us financially," writes Sloan.

Penny Pugh of North Fort Myers, Fla., has owned her condo since 2004. She was unemployed for seven months, but continued to make payments. She took a pay cut in her new job, and now struggles to make her payments. "So many people just walked away from their places and started over," Pugh writes. "I feel like I have spent my whole life trying to maintain—and now feel as though I am barely able to tread water any longer."

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