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Life used to be much simpler for Kim Surratt, a family-law attorney in Reno.

Back when home prices were rising steadily, the divorcing couples with whom Surratt works would agree to sell their house, split the profit and get on with their lives.

But now that thousands of home-owning couples owe more on their mortgages than their homes are worth, Surratt and other professionals face the baffling task: How to equitably divide negative equity.

No one is tracking how many divorcing couples struggle to find an answer to an underwater mortgage.

But 60 percent of Nevada homeowners who have mortgages owe more than their homes are worth, says the Santa Ana, Calif., analysis firm CoreLogic.

And professionals — both in the real estate business as well as those who work with divorcing couples — say the problem is arising consistently these days in northern Nevada.

In fact, th…………… continues on Northern Nevada Business Weekly

In March 2006, Federal Reserve economist David Stockton warned a group of colleagues about the possibility that the housing market was dangerously overextended. “We sense that we’re going over the top, but we just don’t know what lies below,” he said, according to Fed transcripts released earlier this month.

Ben Bernanke, who had just recently taken over as chairman, didn’t seem concerned. “Again, I think we are unlikely to see growth being derailed by the housing market, but I do want us to be prepared for some quarter-to-quarter fluctuations,” he said.

Later that year, the Fed sent a report to Congress stating clearly: “We have not seen — and don’t expect — a broad deterioration in mortgage credit quality.” 

Dallas Fed President Richard Fisher seemed downright dismissive: “As one CEO told me, the only subject that has been more analyzed than the housing situation is the birth of Brad Pitt’s baby.”

These weren’t isolated views. A year and a half before, then-Chairman Alan Greenspan all but wrote off the possibility of a credit bust crippling the economy: “[R]atios of household debt to income appear to imply somewhat more stress than is likely to be the case. For at least a half century, household debt has been rising faster than income, as ever-higher levels of discretionary income have increased the proportion of income spent on assets…………… continues on Motley Fool