Victor Steinbok aardvark66 at GMAIL.COM
Mon Dec 20 18:13:51 UTC 2010

About a month ago (11/13) I commented in another thread,

> Something I've been meaning to suggest that appears to be missing from
> the OED (but not from Wiki) is "underwater" (or "under water") in the
> sense of "negative equity". A recent headline, for example, attracted
> my attention because it read, "One in Three Chicago Area Homes Under
> Water". I would certainly suggest this for inclusion.

[There is more in the original post.] At the time, I neglected to
include a link to the text.

One In Three Chicagoland _Homes_Are_Underwater_. By Micah
Maidenberg.November 10th, 2010
> When President Barack Obama talks about the struggling housing market
> as a "headwind", one assumes he's thinking of issues like this: nearly
> one-third of single-family _homes_ in the Chicagoland area
> _are_underwater_ -- meaning their mortgages are worth more than the
> present value of their homes -- according to an analysis released this
> morning by the real estate firm Zillow.

I wanted to add another piece that appeared today.

Regulator Opposes Mortgage Principle Reductions for
_Underwater_Homeowners_. By Karen Weise, ProPublica. December 20, 2010,
> The administration and some banks themselves have increasingly seen
> reducing the size of a borrower's loan -- what's known as principal
> reduction -- as an important tool for helping the quarter of all
> _homeowners_who_are_underwater_ on their mortgages.
> ...
> This year, Treasury pledged billions of dollars to three programs to
> help both current and delinquent
> _borrowers_who_are_underwater_on_their_mortgages_.
> ...
> Even if not every _underwater_loan_ qualifies, the administration
> thinks "there's a pretty good economic case for Fannie and Freddie to
> participate in those programs," Sec. Geithner testified yesterday.

Note in particular different uses of the same term--homes, loans and
homeowners are all described as "underwater". A quick inspection also
suggests that the same term applies to other versions of "negative
equity" (e.g., stock options that cost more than they are worth). A
business is "underwater" if it is insolvent. Wiktionary, Wordnik and
Dictionary.com have the following definition:

> (of a stock option or other asset) having a market value below its
> purchase value

That is not entirely accurate. The important point is that the market
value is lower than the equity value, irrespectively of the "purchase
price"--or even whether it's been purchased or not--hence "negative
equity" as alternative terminology. And, in the mortgage case, the
market value is lower than the amount still owed, irrespectively of both
the purchase price and the equity held. And because the term can be
applied both to the loan /and/ its holder, different definitions may be

This is not a blip of darkmatter--the term is accepted and fairly common
in the field. However, so far, it's been mostly restricted to
economics/finance dictionaries and a couple of oddballs, such as Wiki.


PS: Some odd behavior from the ADS-L Archives search--I could not find
my original post using either the string "underwater" or "under water".
Searching my personal archive and then tracking down the post by date, I
found the post exactly where it was supposed to be, but, for some
reason, string search did not find it. However, when I changed the
string to "Farlex", the right link popped up right away. Restricting the
dates on the original string also allowed to locate the post. But the
unrestricted search list only shows posts from 2007 or earlier. This is
not the first time I've encountered this difficulty.

The American Dialect Society - http://www.americandialect.org

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