Once you are upside down on your mortgage, and your mortgage payment resets, you have no options.

A Las Vegas Businessweek story explains that distressed-property owners can only make money if they can make a profit after buying and perhaps fixing up, the property. If the owner is upside down, the investor will not buy. Makes sense.

“”We get a lot of phone calls, but only so many of those phone calls are good phone calls. Most have no equity or are upside-down,” said Doug Kupertman, founder of Condor Equities, which buys properties in danger of foreclosure.”

“The market is going down and you have people in a property that is worth less than they owe,” said the man, who asked not to be identified. “We get five calls a day from people we can’t help. They are stuck in their homes with no equity.”

“Federal Deposit Insurance Corporation’s most recent numbers show 61.3 percent of Nevada mortgage loans are interest-only and ARMs, making it second only to California. Nationwide, 49.5 percent fall into that category.”

Wow – almost half the mortgage loans nationwide are interest only or ARMS??? Is this true?

So, if you have equity and are facing foreclosure, you can offload for a quick sale. But without equity, you cannot refinance, you cannot sell to an investor. You’re basically stuck with returning the house to the lender, either in a short sale or bankruptcy.

My concern is that lowering property prices are moving more homeowners with ARMs from the equity-rich position to the upside down position.