OAKLEY -- Juan Medina, who spent 30 years working at U.S. Steel in Pittsburg, has no equity on his house here and an adjustable-rate mortgage for which the interest-only payment has gone up to $5,500 a month.

"I'm retired," Medina, 62, said. "I tried at least 20 different lenders and there's no equity in the home."

Although the notice of public auction was slated for Feb. 26, it was postponed until April 9. The home, according to estimates on ForeclosureRadar, has lost about $27,258 in equity, and Medina is one of the 8.8 million homeowners who now owes more than the house is worth.

For the first time since the Federal Reserve started tracking the data in 1945, the amount of debt tied up in American homes exceeds the equity homeowners have built.

The Fed reported Thursday that homeowner equity actually slipped below 50 percent in the second quarter of last year, and fell to just less than 48 percent in the fourth quarter.

And the housing industry's woes only seem to be getting worse.

Also Thursday, the Mortgage Bankers Association said foreclosures hit an all-time high in the final quarter of last year. And pending U.S. home sales -- those in the gap between when a buyer signs a contract and when the deal closes -- came in below analyst expectations for January and remained at the second-lowest reading on record.

"There is no sign that we're near the bottom in the housing market," said Douglas Elmendorf, a senior fellow at the Brookings Institution and former Fed economist. "Housing prices will probably fall for a year, two or three to come."

The trifecta of reports illustrates a housing market caught up in a "very negative, reinforcing downward spiral," said Mark Zandi, chief economist at Moody's Economy.com.

Home equity, the percentage of a home's market value minus mortgage-related debt, has steadily decreased even as home prices and homeownership rates jumped earlier this decade. That was due to a surge in cash-out refinancings, home equity loans and lines of credit and an increase in no-down-payment mortgages.

Now, declining home prices are eating into equity, and economists expect the figure to drop even more.

Economy.com estimates 8.8 million homeowners, or about 10 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households will be "upside down" if prices fall 20 percent from their peak.

Jay Damato, broker and owner of Elite Financial in Walnut Creek, said the housing downturn is the worst he has seen.

"Mostly in the 1990s you had to put 10 percent down, so if prices went down to 10 percent you were still even," he said.

Most homeowners have spent all their savings and may have even used their credit cards to make mortgage payments, so without equity they can't afford to refinance.

He said he's also working on doing "short-refis," which are similar to a short sale, where the bank agrees to sell a home at a loss rather than foreclose. The new refinancing would mean a bank would agree to a loan for what the house was worth instead of what is owed.

"You have borrowers now that need help now," he said. "Three or four weeks may be too late."

Experts believe foreclosures will rise as more homeowners struggle with monthly payments as the interest rates on their mortgages adjust higher. Problems in the credit markets and eroding home values are making it harder for people to refinance their way out of unmanageable loans.

The threat of so-called "mortgage walkers," or homeowners who can afford their payments but decide not to pay, also increases as home values depreciate and equity diminishes. Banks and credit-rating agencies already are seeing early evidence of it.

But not everyone believes banks and lenders are doing all they can to alleviate foreclosures.

Bryce Ellsworth, a real estate broker with Windermere Ellsworth & Associates in Brentwood, said that short sales, a step before foreclosure when banks sell homes at a loss, are difficult to close because of banks' "unwillingness" to work with buyers.

"There is no service, no accountability and (banks) are unwilling to bend in 90 percent of the circumstances to the detriment of themselves, the economy and housing markets," he said.

A massive loss in home equity could even mean some Americans won't have enough money to retire. On average, housing is Americans' single largest asset, representing 39 percent of a household's total net worth.

Jerry Ruzick, 58, a former computer programmer diagnosed with colon cancer, knows it's only a matter of time before he loses his San Pablo house he shares with his partner.

"It's hopeless," he said. "We just dug our hole and eventually will lose this house."

Ruzick put a second mortgage on his house to pay for medical bills and his partner has stopped working as a chef to act as his caretaker. Ruzick has skipped two of the past few payments.

"We don't have any money for this second loan," he said.

Ruzick, who is taking morphine to deal with pain, said that each day is a trial and he has accepted that he may lose what has been his home for the past 25 years.

"It will be decided, one way or the other," Ruzick said. "I don't have much hope in the future."

Last month, Congress passed a $168 billion economic stimulus package with provisions aimed at helping homeowners refinance into more affordable loans. The Federal Reserve has also slashed interest rates in hopes of spurring growth. On Tuesday, Fed Chairman Ben Bernanke suggested that lenders reduce loan amounts to provide relief to beleaguered homeowners

"At the end of the day, these efforts will be insufficient," Zandi said. "Policy makers will need to be more aggressive and put taxpayer money on the line to stem this."

Medina said he hasn't made a payment for six months and has been denied twice for a loan modification due to financial hardship.

"The house is the only thing I have," Medina said. "For me, the American Dream is gone."