RealtyTrac: 9.3 Million Properties Still ‘Deeply Underwater’

Posted by Patrick Barnard on January 10, 2014 No Comments
Categories : Mortgage Servicing

14843_underwater2 RealtyTrac: 9.3 Million Properties Still 'Deeply Underwater' As of December, there were 9.3 million U.S. residential properties still deeply underwater on their mortgages – representing 19% of all properties with a mortgage – according to RealtyTrac's U.S. Home Equity & Underwater Report.

That's down from 10.7 million residential properties deeply underwater in September, representing 23% of all properties with a mortgage; down from 10.9 million properties deeply underwater in January 2013, representing 26% of all properties with a mortgage; and down from 12.8 million residential properties deeply underwater in May 2012 – the peak for negative equity following the financial crisis – representing 29% of all properties with a mortgage.

RealtyTrac defines ‘deeply underwater’ as homes where the loan amount is at least 25% higher than the property's estimated market value.

About 48% of all properties in foreclosure were deeply underwater in December, according to the report. That compares to about 56% in September.

Meanwhile, about 31% of all residential properties in foreclosure had some positive equity, up from 24% in September.

The number of properties with at least 50% equity grew during the fourth quarter. As of September, about 7.4 million properties, or about 16% of all residential properties with a mortgage, had positive equity of at least 50%.

"During the housing downturn, we saw a downward spiral of falling home prices resulting in rising negative equity, which in turn put millions of homeowners at higher risk for foreclosure when they encountered a trigger event such as job loss," says Daren Blomquist, vice president at RealtyTrac. "Now we are seeing the reverse trend: rising home prices resulting in falling negative equity, which in turn is giving millions of homeowners a lifeline to avoid foreclosure when they encounter a trigger event.’

‘On the other end of the spectrum, the percentage of equity-rich homeowners is nearing a tipping point that should result in a larger inventory of homes listed for sale and give the overall economy a nice shot in the arm in 2014,’ Blomquist adds.

Still, there are ‘millions of homeowners who are in such a deep equity hole that it will take years for them to regain their equity," Blomquist says.

‘The longer these homeowners remain in a negative equity position without relief in the form of a principal loan balance reduction, the more likely that foreclosure will become the path of least resistance for them,’ he adds.

For more, click here.

Register here to receive our Latest Headlines email newsletter




Leave a Comment