Econintersect: CoreLogic released their 3Q2011 negative equity data showing that 10.7 million, or 22.1%, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011. Negative equity is where a homeowner owes more on his home than the home is worth.
This is down slightly from 22.5% in 2Q2011. Negative equity and near-negative equity mortgages (less than 5% equity) accounted for 27.1% of all residential properties with a mortgage.
“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, chief economist with CoreLogic.
These underwater mortgages have a high concentration in Nevada, Arizona, Florida, Michigan, Georgia and California.
CoreLogic points out that 54% of borrowers who have less than 80% loan-to-value (LTV) ratio have above-market interest rates. “It can be more difficult for borrowers with above-average LTV ratios to qualify for refinancing.”