The number of U.S. homeowners who owe more than their property is worth slipped in the second quarter as more residences were lost to foreclosure, according to a report today from CoreLogic Inc.
About 10.88 million homes, or 22.5 percent of those with a mortgage, were “underwater” as of June 30, the Santa Ana, California-based company said. That’s down from 10.91 million, or 22.7 percent, in the prior three months. Another 2.42 million borrowers had less than 5 percent equity at the end of the second quarter, bringing the total properties with negative or near-negative equity to 27.5 percent of mortgaged homes.
“The hardest-hit markets have improved over the last year, primarily as a result of foreclosures,” Mark Fleming, chief economist of CoreLogic, said in a statement. “Nationally, the level of mortgage debt remains high relative to home prices.”
Negative equity is holding back refinancing and home sales, impeding a recovery in the housing market, Fleming said. President Barack Obama, in a Sept. 8 address to Congress, proposed giving more homeowners access to low-rate loans as a way of reducing defaults and boosting consumer spending.
Almost three-fourths of underwater homeowners are paying above-market interest on their mortgages, defined as more than than 5.1 percent, CoreLogic said. The average rate for a 30-year fixed loan was 4.12 percent last week, the lowest in records dating back four decades, according to Freddie Mac.
More than 40 percent of borrowers with a loan-to-value ratio of 125 percent or more are paying mortgages with interest rates of at least 6 percent, compared with 17 percent of borrowers with positive equity, CoreLogic said.
In Nevada, the state with the highest number of foreclosure filings, 60.4 percent of homeowners with a mortgage were underwater. That’s down from about 68 percent a year earlier.
Arizona had the next-highest share of underwater homeowners in the second quarter, at 49 percent, followed by Florida at 45 percent, Michigan at 36 percent, and California at 30 percent, CoreLogic said.
An Obama administration program that allows Fannie Mae and Freddie Mac, the government-controlled mortgage companies, to refinance loans worth as much as 125 percent of a property’s value helped fewer than 840,000 borrowers as of June 30. The government originally predicted that the Home Affordable Refinance Program, announced in March 2009, would help as many as 5 million homeowners refinance at lower rates.
About one-third of the country’s 76 million owner-occupied homes had no mortgage in 2009, the most recent figures available, because they were purchased with cash or the loan was paid off, according to the Census Bureau.