It's not just mortgages that are upside down. Americans' paying habits have flipped, too.
People are staying current with their credit card payments even when they are behind on their mortgage loans, continuing a trend first seen three years ago.
Data now shows that the flip was even more pronounced at the end of 2010, long after industry experts expected patterns to return to normal.
Among consumers who had at least one credit card and a mortgage, 7.24 percent were 30 days late onmortgage payments but current on their card payments at the end of 2010, credit reporting agency TransUnion said. That compared with 4.3 percent in the first quarter of 2008, when the change was first seen on a national basis.
In contrast, 3.03 percent of consumers with both forms of debt were at least 30 days late on credit cards, but current on their mortgage in the 2010 fourth quarter, compared with 4.1 percent in early 2008.
The reversal from traditional payment habits reflects the steep drop in home values and the spike in unemployment.
"As long as housing problems persist and unemployment is high, things are likely to stay flipped," said Sean Reardon, a consultant for TransUnion who produced the study by analyzing data from consumer credit reports.
Not surprisingly, the situation is most pronounced in two states hit hardest by the housing crisis, Florida and California. Both states saw the flip earlier that the rest of the country — in the third quarter of 2007.
The persistence of the reversal shows that consumers don't want to lose access to credit on their cards, especially if they depend on using them to make necessary purchases. "You can't buy groceries with your house," Reardon said.
With tighter regulations making it difficult to manage the accounts of risky customers, banks will now shut a card down if a consumer misses one or two payments. By six months, the account is written off as uncollectible.
In contrast, it can take a year or more after the first missed payment before a house is foreclosed. That gives people who fall behind more time to try to solve their financial problems, said John Ulzheimer, president of consumer education at SmartCredit.com.
It's also easier to keep current on credit cards when times get tight. "The minimum payment on a credit card is a heck of a lot lower than a mortgage," Ulzheimer noted.
The question now is whether credit cards will remain a higher priority for cash-strapped consumers.
TransUnion found in a recent survey that consumers say they would pay their mortgages first if it was possible to make only one of the two payments. But the data show that behavior doesn't reflect those intentions.
Of the consumers who defaulted in the last three months of 2010, 52 percent defaulted on their mortgageswhile keeping their credit cards current, and 22 percent defaulted on credit cards while keeping theirmortgages current.