CoreLogic: R.I. among top five states with ‘underwater’ mortgages in 1Q

PROVIDENCE – Rhode Island was among the top five states with “underwater” mortgages in the first quarter, according to data released Tuesday by CoreLogic.
Nevada had the highest percentage of mortgaged residential properties in negative equity, also known as “underwater” or “upside down,” at 23.1 percent, followed by Florida at 21.2 percent; Illinois and Arizona, 16.8 percent each; and Rhode Island, 15.7 percent, CoreLogic said.
Combined, the five states account for 31.4 percent of negative equity in the country, CoreLogic said.
Negative equity, known as “underwater” or “upside down,” means borrowers owe more on their home than it is worth. It can be caused by a decline in value, increase in mortgage debt, or a combination of both.

Texas had the highest percentage of mortgaged residential properties in positive equity at 97.7 percent, followed by Hawaii at 96.9 percent; Alaska, 96.8 percent; Montana, 96.8 percent; and North Dakota, 96.2 percent.

The number of residential properties in the Providence-Warwick metropolitan area with a mortgage that had negative equity in the first quarter decreased 13.5 percent in the first quarter compared with the prior year period, CoreLogic reported Tuesday.
There were 50,682 properties “underwater,” or 14.2 percent of all residential properties with a mortgage, in the first quarter, compared with 58,427, or 14.7 percent of all residential properties with a mortgage, in first quarter 2014.
An additional 10,210, or 2.9 percent, of properties were in near negative equity in the first quarter in the Providence-Warwick metro, compared with 11,412, or 3.2 percent, in first quarter 2014, CoreLogic said.
Nationally, the number of underwater homes declined 19.4 percent year over year to 5.1 million properties, representing 10.2 percent of all mortgaged properties.

Frank Nothaft, chief economist for CoreLogic, said, “About 90 percent of homeowners now have housing equity and, as a result, have experienced an increase in wealth, which can spur additional consumption and investment expenditures. The remaining 10 percent of owners with negative equity will find their home value rising while they continue to pay down principal on their amortizing mortgage loan.”

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Anand Nallathambi, president and CEO of CoreLogic, said many homeowners are “emerging from the negative equity trap.”

“With the economy improving and homeowners building equity, albeit slowly, the potential exists for an increase in housing stock available for sale, which would ease the current imbalance in supply and demand. There are still about 5 million homeowners who are underwater and we estimate that a further 5 percent appreciation in home values across the U.S. would reduce the number of owners with negative equity by about one million,” Nallathambi said.

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