Borrowers in Negative Equity Declining as Home Values Gain: Report
“About 600,000 borrowers rose above negative equity in the second quarter of 2012, CoreLogic reported Wednesday.
According to the company’s analysis, 10.8 million, or 22.3 percent, of residential properties with a mortgage remained underwater for the second quarter of 2012. The second quarter figure is a decrease from the first quarter of this year, when 11.4 million properties, or 23.7 percent, were underwater.
Even though negative equity is said to be a driving factor for default, 84.9 percent of underwater borrowers managed to stay current on their payments.
“The level of negative equity continues to improve with more than 1.3 million households regaining a positive equity position since the beginning of the year,” said Mark Fleming, chief economist for CoreLogic. “Surging home prices this spring and summer, lower levels of inventory, and declining REO sale shares are all contributing to the nascent housing recovery and declining negative equity.”
While 600,000 homes moved into positive territory, 2.3 million borrowers were in a state of near-negative equity since they had less than 5 percent equity in their home. For these borrowers, the scale can tip either way, depending on the direction of home prices…”
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