RHODE ISLAND was among the top five states with underwater mortgages in the second quarter, according to CoreLogic. A total of 13.8 percent of mortgaged residential properties were in negative equity.
The Ocean State trailed only Nevada (20.6 percent), Florida (18.5 percent) and Arizona (15.4 percent) for mortgaged properties in negative equity, which also is known as “underwater” or “upside down.”
Negative equity refers to borrowers who owe more on their homes than they are worth. It can happen due to a decline in home value, increase in mortgage debt or a combination of both, CoreLogic said.
In comparison, Texas had the highest percentage of mortgaged residential properties in positive equity at 97.9 percent, followed by Alaska (97.6 percent) and Hawaii (97.5 percent).
The percentage of mortgaged residential properties in the Providence-Warwick area in negative equity also was 13.8 percent, matching Rhode Island’s rate. That represents a slight drop from 14.4 percent in the second quarter of 2014, according to CoreLogic.
CoreLogic said 49,248 properties were in negative equity in the metropolitan area in the second quarter, compared with 50,904 during the same period a year ago. An additional 10,339, or 2.9 percent, of all properties were in near negative equity in the second quarter compared with 10,152, or 2.9 percent, in second quarter 2014.
CoreLogic said 759,000 properties nationwide regained equity in the second quarter, bringing the total number of mortgaged residential properties with equity to approximately 45.9 million, or 91 percent.
The total number of mortgaged residential properties with negative equity is 4.4 million, or 8.7 percent of all mortgaged properties, a drop from 5.4 million homes, or 10.9 percent, in second quarter 2014.
“For much of the country, the negative equity epidemic is lifting. The biggest reason for this improvement has been the relentless rise in home prices over the past three years which reflects increasing money flows into housing and a lack of housing stock in many markets,” Anand Nallathambi, president and CEO of CoreLogic, said in a statement. “CoreLogic predicts home prices to rise an additional 4.7 percent over the next year, and if this happens, 800,000 homeowners could regain positive equity by July 2016.”
Approximately 9 million, or 17.8 percent, of more than 50 million residential properties with a mortgage have less than 20 percent equity (known as “under-equitied”), and 1.1 million, or 2.3 percent, have less than 5 percent equity (referred to as near-negative equity).
Borrowers who are “under-equitied” may have difficulty refinancing their existing homes or obtaining new financing to sell and buy another home due to underwriting constraints. Borrowers with near-negative equity are considered at risk of moving into negative equity if home prices fall, CoreLogic said.
“Home price appreciation and foreclosure completions both reduce the number of homeowners with negative equity, the latter because most homeowners who lost homes through foreclosure had some level of negative equity,” Frank Nothaft, chief economist for CoreLogic, said in a statement. “Between June 2014 and June 2015, the CoreLogic national Home Price Index rose 5.6 percent, and we reported the number of homes completing foreclosure proceedings exceeded one-half million. Both of these factors helped reduce the number of homeowners with negative equity by one million over the year ending in June.”Source; PBN.COM Core Logic Q2 2015
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