|A report says 22.8% of all mortgaged homes were "underwater" in the fourth quarter of 2011 -- meaning borrowers owe more on their mortgages than their homes are worth.|
NEW YORK ( MainStreet) -- It's a strange economic "recovery" when 22.8% of all residential properties with a mortgage -- 11.1 million in all -- were financially underwater at the end of last quarter. These startling findings come from a report by housing monitor CoreLogic, and are up from 10.7 million in the third quarter of 2011. The continuing trend of foreclosures and declining home prices are to blame, but that doesn't help homeowners or the housing market get back on top of their mortgage debt. CoreLogic reports that negative equity (when borrowers owe more on their mortgages than their homes are worth) in U.S. homes has regressed to levels last seen in the third quarter of 2009, at the height of the Great Recession.
Another 2.5 million mortgage holders were at what CoreLogic calls "near-negative equity," meaning those homeowners had less than 5% equity in their homes in the fourth quarter of 2011. All told, underwater and near-underwater homeowners account for an alarming 27.8% of all U.S. home mortgages, with outstanding mortgage debt in negative equity home standing at $2.8 trillion. "Due to the seasonal declines in home prices and slowing foreclosure pipeline which is depressing home prices, the negative equity share rose in late 2011," said Mark Fleming, chief economist with CoreLogic, in the report. "The negative equity share is back to the same level as Q3 2009, which is when we began reporting negative equity using this methodology. The high level of negative equity and the inability to pay is the 'double trigger' of default, and the reason we have such a significant foreclosure pipeline."