Hang in there Miss M! I live on the east coast (Pa.) and like you find myself in the same boat. How ever, I do believe after this storm blows over (in about 2-5 years) we both and hopefully everyone in this boat will catch a big wave and all will come to shore (way ahead!!!). Good luck

I'm so relieved to see a reasonable, thoughtful person in my same boat!  I read a lot of personal finance blogs and the judgmental tone about those of us who are underwater is hurtful.  There seems to be a general sense that we were all financial idiots who jumped blindly on a bandwagon, got burned and are now whining for help.  

I did the research -- I committed less than 25% of my income to the mortgage payment and put 10% down.  I took into consideration that historically the worst slump was in California and ate 20% of the equity people had built in their homes.   And I had read many many books about what a good investment a house was when you bought and held to pay off the mortgage.  I was 40 when I bought the house -- so I planned to pay it off by the time I retired in my late 60's.  Seemed like a plan.  

And our incomes seemed stable.  I've been at my salary level for 12 years and my husband for about the same time.  Now,  I face a layoff at the end of the year and after 6 months of searching diligently have realized I'm likely to take a 30-40% pay cut.  My husband's company is closing their office locally and while he's safe for the moment, it's clear he'll have to find something new in the next year or two (probably also with a pay cut).  Again, what seemed like a reasonable expectation has run amok.  

So now I have a $2100/mo mortgage payment on a modest 1500-square foot 1957 bungalow in Central Phoenix that is $75K underwater.  I'm still in it for the long haul and will ride it out too, but it does seem like 1) the media are missing the boat by focusing on the extreme stories rather than the run-of-the-mill folks like Miss M and me and 2) quite a few of the bloggers out there are only believing what they read in that media rather than actually talking to hard working people who made the same decisions they did at a different time and are now trapped in a bad situation that may get worse.  

So thank you, Miss M. -- and Ms. Datko -- for telling one of our stories.  

Wow.  Those are some scary situations.

The good thing is, if you plan to stay in your home long term and can afford it, you should not panic.  If you can't afford the house, that's a whole different ballgame.

I recently saw a financial expert say that a family should be able to tread water on the mortgage even if one or both incomes in the household or lost.

For three years I lived in El Paso, Texas where there is quite a bit of equity to be made.  I've known folks who have bought a home for $160,000 only to sell it eight months later for $240,000.  And don't forget that profit made on a home sale (in many instances) is non-taxable, especially if the seller is purchasing another home or had to move due to a job relocation.

I was able to get in on this jump.  In 2005 I purchased a 1200 2/1.5 condominium for $64,000.  It had a new kitchen, nice carpet, and 12" Italian tiles that were just laid.  In the two years I lived there, I rented out the second bedroom which made owning a home cheaper than renting.  The only downside was the blasted HOA ($181 a month).  In 2007 I accepted a job in Florida and sold the condo to a teacher my age for $85,5000.  Used the money to pay off half of my student loans.  Have never regretted owning a home...

www.becomingthemarshmallow.com

Wow... I guess nobody should ever get too comfortable. I'm lucky to live in one of the more stable areas (in fact, just found a new home to buy today - YAY!), and will admit that I have been judgemental of those who have found themselves upside down on their mortgages. Reading the Miss M.'s story, as well as that of the commenters above, has helped me to understand that sometimes people really can be victims of crappy circumstances.

Yes, there were people who were getting in it to flip houses and also first time homebuyers who didn't know what they were getting into, however you must take into consideration that many bought new homes right at the peak at the highest price and then the bubble burst and the values have gone down considerably in most markets. The people who bought at 500k home making 30k and for the mortgage broker who gave them the loan, thanks for contributing to this financial mess of empty neglected homes, ruined credit histories, and declining home values. There were people who got conventional loans that are underwater only because like I mention they bought at the peak and it has been declining. It doesn't matter if you put 10%, 25%, or nothing down. The values have declined regardless and you will still be underwater for the mostpart regardless of what you put down. That's not they buyers fault for being underwater. Eventually values will only go up after this record breaking real estate debacle ends. It will take some time but nobody really knows how long. It will just happen when it happens. Nobody knew how good it was going to be when it was and nobody predicted how bad it will get. The unfortunate thing is the amount of homes that are empty and what will happen to them. There are just way too many homes out there that are available and those have to be cleaned up off off the market before anything gets better. By the way I'm underwater by about 100k and sure you can cry about it. At least I didn't put any cash down and I have a loan that wont ajdust for another 7 years. knew not to get one of those attractive 2-3 year adjustables. I knew it was a recipe for disaster. Good luck to all and lets hope we can ride this low wave out.

I think it is so disheartening to think of how much money people pay for real estate, hoping to make at least a little money from appreciation and then this financial crisis happens and they are underwater.  I think a lot of this problem stemmed from greed, and those of us who are paying our mortgages on time are going to be penalized.  I think those that got in trouble by taking on too much of a mortgage should not get the easy way out.  It's crazy.

www.ultimatemoneyblog.com

This so-called loss is only on paper unless she has to sell!  If she had not purchased she would have been throwing her money away on rent all of these years, and the money she used for her down payment, if it had been invested in the stock market, would have lost about 40% by now.  

I am so glad I bought my home back in late 2006. Yes, the neighbors may be selling theirs for less now, but I purchased with the idea this would be a long-term investment and, most important, it is my own home! Plus, I got a fantastic loan that probably would not be available to me today (and NOT a neg. amortization loan!).  

Real estate is always a good investment --but it is a long term investment, and any so-called losses are only on paper unless one sells.  Walking away and ruining my credit (and totally losing the 20% down payment I made)  when I can make my payments and I planned to live her indefinitely would be ridiculous.  Besides, where would I go? Rent is more than my house payment.  

Actually, the best thing one can do now is buy another (investment) property and 'dollar cost average' at this time!

Real estate where I live in Florida is actually a pretty good deal right now.  You can pick up a decent property near the beach in Tampa Bay for under $100,000.  My fiance and I hope to get a cheap fixer upper and rehab.

I've owned in El Paso, Texas and made out pretty well there with a condo.

www.becomingthemarshmallow.com

I find myself on the receiving end of others' uneducated opinions.  Under NO circumstances should one be judgmental of another,especially since you are unable to "walk in my shoes".

I purchased my home in 2004 with the assistance of a "First Time Buyers Program" and a lot of hard work on my part.  As a single mother, the thought of giving my child the solid stability of a "home" the fuel that kept me going as I worked to improve my credit.   I researched and saved, I questioned and worked, closing on my home in early 04.  I didn't stop there, no, I continued to work on our future.  And yes,  EMWRITES, some people really are victims of "crappy circumstances", and in some cases the sinking is assisted  by our government.  I will be the first to admit that some of the choices I made were not the wisest (hindsight is always 20/20), but I did my best.  

I don't want to lose my home, walking away is not an option.  I have come to accept that my credit will never recover as is, but I will still continue to fight for the values and beliefs that I hold so dear.  I have to say though, no matter what my future holds, NOTHING will ever take away that feeling of accomplishment and pride I felt when I unlocked the door and went "home" for the first time.

Wow, I never imagined my story would reach such a wide audience. I appreciate hearing from the other homeowners in the same predicament. Seestellars comment struck me especially, I never realized we had a story that wasn't being told. I have a lot of friends in the same position, we came into the homebuying age range at the wrong time. I created a blog for underwater homeowners to share their story and find out about the state of the housing market. It's at

underwaterhomeowner.blogspot.com

Thank you Karen for highlighting my story and showing another side of the housing crisis.

Miss M