RISMEDIA, February 26, 2010—(MCT)—More than 11.3 million homeowners—nearly one-fourth of all Americans with a mortgage—owe more on their loan than their home is now worth, according to a report recently released by FirstAmerican CoreLogic.
More than 10% of people with mortgages owe 25% more than their home is worth. The number of underwater mortgages increased by about 620,000 from the third quarter, the firm said. An additional 2.3 million mortgages had less than 5% equity in their home, which could be wiped out if home prices fall further. In the fourth quarter, national home prices fell 1.1% compared with the third quarter, Standard & Poor’s reported in a separate report.
Once the mortgage is underwater, owners cannot easily sell their home or refinance their loan. Underwater mortgages are concentrated in few states: California, Florida, Nevada, Arizona, Michigan and Georgia. In Nevada, 70% of mortgages were underwater. In California, more than a third of mortgages were underwater.
“The rise in negative equity is closely tied to increases in pre-foreclosure activity,” CoreLogic said. Once a homeowner owes 25% more than the house is worth, foreclosure rates rise sharply. Negative equity exceeded 25% in six states and topped 20% in six others.
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