Definitions U


From the investment community

“In a general sense, underwater describes a financial instrument that from the holder's perspective is worth less than the value of the collateral it is attached to.”


“When a homeowner is left with more debt on their home than what it is worth on the current market value, they now have what is called an underwater mortgage.”

Additionally, (from

“Generally, an underwater mortgage situation does not arise when a buyer takes out a first mortgage. The condition tends to arise when a second or third mortgage is taken out, or if factors within the area cause the property to depreciate in value unexpectedly.”