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The Federal Reserve stated Thursday that American home equity fell below 50 percent for the first time recorded since 1945. Economists are expecting equity to drop even further due to declining home prices eating into the value of what is usually a person's single largest asset. CNBC states:

Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be "upside down" if prices fall 20 percent from their peak.

The latest Standard & Poor's/Case-Shiller index showed U.S. home prices plunging 8.9 percent in the final quarter of 2007 compared with a year ago, the steepest decline in the 20-year history of the index.

The news follows a report from the Mortgage Bankers Association on Thursday that home foreclosures skyrocketed to an all-time high in the final quarter of last year. The proportion of all mortgages nationwide that fell into foreclosure surged to a record of 0.83 percent, while the percentage of adjustable-rate mortgages to borrowers with risky credit that entered the foreclosure process soared to a record of 5.29 percent.

Part of the reason that foreclosures are skyrocketing still is the amount of what are referred to as "mortgage walkers", homewoners that are able to afford the payments but decide not to. Fed Chairman Ben Bernanke suggested Tuesday that lenders reduce loan amounts to give relief to homeowners.