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One in 5 mortgages in R.I. ‘underwater’


PROVIDENCE – One in five Rhode Island homeowners with a mortgage owed more than their properties were worth at the end of the first quarter, CoreLogic Inc. reported Monday.

Across the state, 47,395 homes, or 21 percent of all mortgaged properties, had negative equity as of March 31, the California research company said.

Homeowners whose properties are worth less than the amount owed on them – which includes original mortgages as well as second mortgages or home equity loans – are often said to be “underwater.” It can happen because home values decline, because mortgage debt rises, or from some combination of both.

Rhode Island had the nation’s 11th-highest share of mortgages underwater at the end of the first quarter, and the highest share in New England, CoreLogic said. (Figures for Maine and Vermont were not available.)

The median sales price of a single-family home in Rhode Island was $193,500 in March, down 20 percent from $243,000 in March 2008, according to the Rhode Island Association of Realtors.

Another 8,398 Rhode Island homes – 3.7 percent of all mortgaged properties – will be underwater here if prices decline another 5 percent, CoreLogic said.

That was relatively good news, however. As a percentage of all mortgages, only eight states had a smaller share of properties with “near-negative equity” as of March 31 than Rhode Island.

Colorado had the most at 8 percent, followed by Georgia (7.9 percent) and Tennessee (7 percent). In New England, New Hampshire had the most (5.7 percent), followed by Connecticut (3.8 percent), Rhode Island and Massachusetts (3.6 percent).

The share of all properties in Rhode Island with either negative equity or near-negative equity combined was 24.6 percent, slightly lower than New Hampshire (24.8 percent) but higher than Massachusetts (19.2 percent) and Connecticut (16.1 percent).

The total number of American homeowners with negative equity fell slightly in the third quarter, to 11.2 percent from 11.3 percent.

The bulk of U.S. residential properties with negative equity as of March 31 were concentrated in five states: Nevada (70 percent underwater), Arizona (51 percent), Florida (48 percent), Michigan (39 percent) and California (34 percent), the company said.

“The two most important triggers of default, negative equity and unemployment, have stabilized over the last six months,” Mark Fleming, CoreLogic’s chief economist, said in a statement. “As house prices grow again and borrowers pay down their mortgage debt, negative equity levels will begin to diminish.”

“The typical underwater borrower is likely to regain their lost equity over the next five to seven years,” he added.

CoreLogic also said Rhode Island had the eighth-best statewide loan-to-value ratio in the country.

The state’s homeowners had $39.6 billion in mortgage debt outstanding on $63.7 billion worth of property as of March 31, CoreLogic said. That gave Rhode Island a 62 percent state-level loan-to-value ratio, tied with Pennsylvania and New Jersey.

In New England, Rhode Island’s loan-to-value ratio was better than New Hampshire (70 percent) and behind Massachusetts (61 percent) and Connecticut (59 percent). New York had the nation’s strongest loan-to-value ratio, at 50 percent.

Nevada’s loan-to-value ratio was the worst at 123 percent, with $128.3 billion owed on only $104.5 billion worth of property statewide, according to CoreLogic.


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