CoreLogic: R.I. fourth-highest for underwater mortgages in 3Q

CORELOGIC SAID Rhode Island had the fourth-highest percentage of mortgaged homes in negative equity nationwide in the third quarter at 12.3 percent. / COURTESY CORELOGIC
CORELOGIC SAID Rhode Island had the fourth-highest percentage of mortgaged homes in negative equity nationwide in the third quarter at 12.3 percent. / COURTESY CORELOGIC

PROVIDENCE – Rhode Island had the fourth-highest percentage of mortgaged homes in negative equity at 12.3 percent in the nation in the third quarter, CoreLogic said Tuesday.
Negative equity, also known as underwater or upside down, refers to borrowers who owe more on their homes than they are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or a combination of both, CoreLogic said.

The Providence-Warwick metropolitan area’s percentage of mortgaged residential properties in negative equity was less than Rhode Island as a whole. The Providence metro had 40,153, or 11.2 percent, of mortgaged residential properties in negative equity in the third quarter, compared with 50,179, or 14.1 percent, in third quarter of 2014.
An additional 8,626, or 2.4 percent, of properties were in near negative equity in the third quarter in the Providence metro compared with 10,072, or 2.8 percent, in 2014 third quarter.
Nationwide, Nevada had the highest percentage of homes in negative equity at 19 percent, followed by Florida at nearly 18 percent and Arizona, at 14.6 percent, CoreLogic said. Maryland had the fifth-highest percentage at 12.1 percent. Combined, the five states account for 29.3 percent of negative equity in the U.S., CoreLogic said.
As for the highest percentage of mortgaged residential properties in positive equity, Texas led the nation at 97.9 percent, followed by Alaska at 97.7 percent, Hawaii at 97.6 percent, Colorado at 97.2 percent, and Montana, 97.1 percent.
CoreLogic said that nationwide, 256,000 properties regained equity in the third quarter, bringing the total number of mortgaged residential properties with equity to approximately 46.3 million, or 92 percent of all homes with a mortgage.
Nationwide, the total number of mortgaged residential properties with negative equity stood at 4.1 million, or 8.1 percent, in the third quarter. That decreased 20.7 percent year over year from 5.2 million homes, or 10.4 percent, compared with third quarter 2014.

“Home price growth continued to lift borrower equity positions and increase the number of borrowers with sufficient equity to participate in the mortgage market,” Frank Nothaft, chief economist for CoreLogic, said in a statement. “In the last three years, borrowers with at least 20 percent equity have increased by 11 million, a substantial uptick that is driving rapid growth in home equity originations.”

Said Anand Nallathambi, president and CEO of CoreLogic, “Homeowner equity is the largest source of wealth for many Americans. The rise in home prices, expected to be at least 5 percent in 2016, will continue to build wealth and confidence across America. As this process continues, it will provide support for the housing market and the broader economy throughout next year.”

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CoreLogic said approximately 3.1 million underwater borrowers hold first liens without home equity loans, and the average mortgage balance for these borrowers is $229,000, with the average “underwater” amount at $58,000.
In addition, approximately 1.6 million underwater borrowers hold both first and second liens. Among this group of borrowers, the average mortgage balance is $307,000 and the average underwater amount is $83,000.
Also, the bulk of positive equity for mortgaged residential properties is concentrated at the high end of the housing market, CoreLogic said, adding 95 percent of homes valued at $200,000 or more have equity, compared with 87 percent of homes valued at less than $200,000.

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