Posted on August - 27 - 2010
Foreclosures Leave Fewer Mortgages Underwater
The number of “underwater” mortgages declined in the second quarter of the year, but that’s mainly because some of those borrowers lost their homes to foreclosure, according to a new report out this week.
The real estate data company Corelogic reported this week that 11 million homeowners, representing 23 percent of outstanding U.S. mortgages, were in negative equity in the second quarter of the year; that is, the amount owed on their mortgage exceeded the value of their home. That was down from 11.2 million previously and marked the second straight quarterly decline in underwater loans.
Loan-to-value ratio a major factor
Unfortunately, that decline was primarily due to foreclosures, the report said, and not rising or stabilizing prices. Practically the entire decline was among borrowers whose loan-to-value ratios exceeded 125 percent; that group, which is associated with a higher risk of default or foreclosure, shrank to 4.8 million homeowners, down from 5 million in the first quarter. “Negat Full Post…