Magazine article Mortgage Banking

Negative Equity Share Remains at 22 Percent in Third Quarter

Magazine article Mortgage Banking

Negative Equity Share Remains at 22 Percent in Third Quarter

Article excerpt

The share of home loans with negative equity stayed essentially flat in the third quarter of 2011, according to CoreLogic, Santa Ana, California. The data showed 10.7 million loans or 22.1 percent of residential properties carrying a mortgage were underwater. That was down just slightly from the 10.9 million properties or 22.5 percent in the second quarter.

"Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness. The nearly $700 billion mortgage debt overhang has touched many corners of the market, and this overhang is holding back the recovery of the housing market and broader economy," said Mark Fleming, CoreLogic's chief economist.

The concentration of underwater loan problems in five states was clearly evident in the third-quarter data. The lop five states with the highest share of negative equity loans had an average negative equity ratio of 41.4 percent. The remaining states had a combined average negative equity ratio of just 17.6 percent, according to CoreLogic.

Nevada had the highest negative equity percentage with 58 percent of its home loans being underwater. …

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