Its about time we correct the underwater mortgage misconception.   Yes, negative equity, or being upside down means  the market value of the home has fallen below the mortgage balance owed.   There is however one misconception to correct about this.  Most believe the person who is buying the home is underwater, but truly it’s the lender who is underwater. How so?   Well consider this. We all know the person who agreed to pay for the property does not truly “own it” till the balance is paid in full. The familiar phrase “The owner owes more than the home is worth” misleads many to be held hostage by the thought, they are in the hole.  But while the home buyer does have a payment term to keep the “owner” in the meantime is THE LENDER.  Facts: The Lender owns the property until the note is paid off.  Otherwise they would have no power over the property.  Buyers who have committed to paying the promissory purchase note should not feel trapped or held hostage by the notion commonly felt in the US.  Another fact is: If the tenant needs to sell the house, instead of taking a beating by the slumping market and short sale strategy,  they can simply have another buyer take over their legal obligation without defaulting on the loan. All FHA and VA mortgages are assumable.   There are many financial benefits to this as well.