How to get out of the situation?
If you’re looking to be rescued from an underwater mortgage, the first thing to do is to call a lender and rework the loan. “Many lenders will be willing to rework the loan,” says Yun. “Some will [hone in] on details and there will be a lot of headache involved, but it should be done.”

The next step is to contact the Federal Housing Administration (FHA) originators, experts agree. Those who find themselves underwater should consider “getting out of their current mortgage and moving into a government backed FHA mortgage,” says Lyun. “There has been a surge in FHA market participation, and it’s been ongoing for the past twelve months.” The shift has been seen in those who originally took on subprime loans, largely due to market changes, he adds.

Homeowners must be aware of their options to avoid foreclosure. “Everyone is in trouble because of the adjustable rates,” says Twyford, but foreclosure doesn’t have to be inevitable. "Homeowners should look into options like loan modification and refinancing their homes."