If You’re Feeling Stuck About Selling with Negative Equity
At the start of 2025, about 1.2 million U.S. homeowners — roughly 2.1% of all mortgaged properties — were underwater, meaning they owed more than their homes were worth. While exact figures for Monroe County and the Pocono Mountains aren’t published, local market trends tend to mirror national patterns. That means even here in Northeast Pennsylvania, some homeowners are still dealing with negative equity.
The good news is that owing more than your home’s value doesn’t close off your options — you still have multiple paths to explore. Below, we’ll explain what negative equity means, why it happens, and which selling solutions may work best in our region.
Recognize Negative Equity
Negative equity (also called an underwater or upside-down mortgage) occurs when you owe more on your home than its current market value. This situation often arises if property values soften due to regional economic shifts or if you take on a large loan compared to the home’s appraisal. During the Great Recession, for example, home values in Northeast Pennsylvania dropped sharply — in Monroe County, median prices fell by nearly 25–30% between 2008 and 2012, leaving many Pocono homeowners underwater.
If you plan to stay in your home long-term and can keep up with mortgage payments, negative equity may pose fewer immediate problems. But if you need to move, or if you’re behind on payments, it’s vital to explore ways to sell without sinking your credit standing (Bankrate).
Today, the picture looks much different. In Monroe County, median home values are around $311,900, with typical sold-home prices in 2024 near $324,800 — a sign of steady market stability. Foreclosure filings are also at very low levels, with just four recorded in June 2025, down about 50% from a year earlier. Together, these trends suggest that the local risk of negative equity is far lower than during the sharp declines of a decade ago.
Explore Your Selling Options
Cover The Shortfall
Sell your home for its market value and personally pay any difference to your lender. While this protects your credit from serious damage, it can be difficult if finances are tight. Some Monroe County homeowners explore repayment plans with their lender or meet with local housing counselors. You might also look into selling house with mortgage arrears if you’re behind on your payments.
Attempt A Short Sale
In a short sale, you sell your home for less than what you owe, and the lender decides whether to forgive the remaining balance. Short sales were common in the Poconos during the post-2008 downturn and remain an option today. A short sale can help avoid full foreclosure, but it may still affect your credit score for up to four years (Prospect by Buildout). Although approval can take time, a short sale allows you to move forward without the full burden of an underwater mortgage. If you want to explore local options, you can also learn more about foreclosure in the Poconos.
Deed In Lieu
Handing your deed directly to the lender can stop foreclosure and reduce stress, though credit impact is similar to a short sale. In Northeast PA, this option is sometimes chosen when a short sale falls through or when a homeowner wants to act before a sheriff’s sale. If you’re battling looming foreclosure, you could also consider selling house to avoid foreclosure or selling house in default.
Below is a quick comparison of these three methods:
| Option | How It Works | Key Consideration |
| Cover The Shortfall | Sell the home at current value, personally pay the difference | Requires enough resources to make up the shortfall |
| Short Sale | Sell for less than owed, lender may forgive remainder | Impacts credit for years, approval can be slow |
| Deed In Lieu | Sign over deed to lender to avoid full foreclosure | Similar credit impact to a short sale, but may be faster in some cases |
Consider Other Strategies
Wait It Out
If you can afford payments, staying put may allow equity to recover. As of early 2025, only about 2.1% of U.S. mortgages were underwater (Cotality) — far lower than a decade ago. In Monroe County, steady price growth has already helped many homeowners regain equity.
Refinance If Possible
Refinancing usually requires equity, but some programs, such as the HIRO program for Fannie Mae loans, may provide options if you’re underwater. You can also explore options if you’re selling house in pre-foreclosure and your loan type allows modifications. Pennsylvania homeowners may also qualify for loan modifications or state-level mortgage assistance.
Make Upgrades
Targeted improvements can raise your home’s value. In the Poconos, where vacation and second homes are common, upgrades that enhance comfort, energy efficiency, and rental appeal often deliver the best return. Focus on high-impact areas like kitchens, bathrooms, or curb appeal, but avoid overspending beyond the neighborhood market level.
A Friendly Next Step
If negative equity has you worried, remember there are proven paths forward. You can try covering the shortfall, pursuing a short sale, or signing a deed in lieu. You also have the option to wait out the market or explore refinancing, depending on your situation.
Many Pocono and Northeast PA homeowners have successfully navigated these challenges by seeking expert guidance and weighing all options. You deserve a fresh start. If you’re facing missed payments or a potential foreclosure, know that you’re not alone — and that you still have choices to protect your financial future and peace of mind.