No surprise, here. I thought it would be more than 25% underwater. I dont think the ARM loans have anything to do with it. Most of those came to term 2 years ago, and many of those borrowers foreclosed or refinanced. I do not think banks would still be offering them today.

Most of the underwater mortgages are due to the decline in home prices. I bought my home in 2006 right after Hurricane Katrina, and prices were slightly inflated do to the influx of new buyers to the area. Refinacned last year at an extremely low interest rate. If I sold my home today, I would do so at a loss.