Smaller Percentage of Homeowners Underwater in Q2

The percentage of borrowers underwater on their mortgage declined during the second quarter, but that welcome change of pace could come to an abrupt end as home values are again beginning to fall in markets across the country.

The real estate data provider Zillow reported Monday that negative equity — which refers to the percentage of single-family homeowners with mortgages who owe more on the loan than their home is worth — dropped to 21.5 percent in Q2.

That’s down from Zillow’s negative equity reading of 23.3 percent in the first quarter of this year, and 23 percent during the second quarter of 2009.

The Zillow Home Value Index shows that home values, too, continued to drop in the second quarter, but the Seattle-based company says the rate of decline decelerated from the first quarter.

Zillow reports that home values in Q2 fell 3.2 percent year-over-year and 0.6 percent from the first quarter…

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