More home foreclosures could be on the horizon

First American CoreLogic, the first company to develop a national, state and city-level negative equity report, just released third quarter data showing that nearly 10.7 million, or 23 percent, of residential property mortgages are underwater.

Another 2.3 million are almost in negative territory as well, with less than 5 percent equity. All of this means more home foreclosures could be on the horizon.

The highest concentration of mortgages with negative equity are in five states: Nevada (65 percent of all residential mortgages in the state are underwater), Arizona (48 percent), Florida (45 percent), Michigan (37 percent) and California (35 percent). California’s 2.4 million upside down residential mortgages and Florida’s 2.0 million account for 42 percent of all negative equity loans nationwide.

“Negative equity continues to be pervasive and to impact almost every segment of the housing market,” said First American CoreLogic’s chief economist, Mark Fleming, in a news release. “The recent improvement in home prices this past spring and summer has slowed the increase in negative equity, but it will take a significant rebound in home prices, which we are not expecting, to offset the dampening effects of negative equity in the most depressed states.”

First American CoreLogic discovered some commonalities among those with negative equities, including home purchase between 2005 and 2008, reliance on adjustable rate mortgages (ARMs) and buying less expensive properties. The average value for all properties with a mortgage is $270,200, but properties with negative equity have an average value of $210,300, 22 percent lower value.

Public record data was used as the source of mortgage debt outstanding. First American CoreLogic determined equity by subtracting each property’s estimated current value from the mortgage debt outstanding.

Written by Sharalyn Hartwell
HULIQ.com