Underwater Mortgage Refinancing
ByMillions of homeowners continue to complain about the lack of solutions for underwater mortgage refinancing. CoreLogic issued an alarming report regarding negative equity that points to a double dip and another housing bubble bursting in the near future. Almost 23% of all U.S. homeowners who are struggling with underwater home mortgage loans at the end of the first quarter of 2011 fell slightly from 23.1% in the 4thquarter of 2010. CoreLogic reported that nearly 11 million homeowners have negative equity and are strapped with underwater home loans. With so many borrowers owing more on their home loans than their property is worth and another 2.5 million borrowers were nearly underwater which the real estate data and analytics company defines as having less than 5% positive equity.
It’s no secret that the decline in home prices led to the underwaterwater mortgage trend. Borrowers with 2nd mortgage liens on their home were twice as likely to suffer negative equity as those with only one lien. 18% of borrowers without home equity mortgages were underwater while 38% of borrowers with home equity loans were in a negative position. A total of 4.5 million underwater borrowers have an equity loan or credit line.
CoreLogic’s recent report does not attach a total dollar value to negative equity statistics but an analysis of the distribution of underwater home loans based on fourth-quarter 2010 numbers was published by the company last month which put the aggregate national net equity at $750 billion. The %age of underwater borrowers has declined only 4 basis points since that time.
- The average underwater borrower owes $65,000 more than their home’s estimated value.
- According to CoreLogic the states with the most significantly underwater mortgages did show slight improvement from the 4th quarter of 2010;.
- Home loan default rates increase with the level of underwater mortgages but not necessarily with the number of outstanding loans.
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