CoreLogic: More foreclosures lead to fewer underwater mortgages
There were fewer homeowners underwater on their mortgage at the end of the third quarter than the second quarter, but it's because more properties that had severe negative equity were foreclosed upon not an increase in home values. CoreLogic (CLGX) said 10.8 million residential properties, or 22.5% of all U.S. homes, were in negative equity at Sept. 30, down from 11 million, or 23%, the prior quarter. "Negative equity is a primary factor holding back the housing market and broader economy," according to Mark Fleming, chief economist with CoreLogic. "The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity." The data analytics firm said the number of borrowers who owe more on their mortgage than their home is worth has decreased by more than 500,000 this year. Still, another 2.4 million homeowners had less than 5% equity in the third quarter, and 27.5% of all mortgages are in negative equity or near-negative equity. CoreLogic said five states – Arizona, California, Florida, Michigan and Nevada – continue to have the largest number of underwater mortgages. Two-thirds of Nevada mortgages are for more than the property is valued. Conversely, nearly half of New York homeowners have 50% or more positive equity. Write to Jason Philyaw.