Fewer Mortgages Underwater as More Borrowers Drown
A quick skim of the business headlines today reveals that fewer U.S. mortgages are underwater. This might sound encouraging, as it means fewer Americans have mortgage balances greater than the value of their homes. Yet, it's important to look a little deeper into the reason for this decline. CoreLogic, a business service analytics firm, provides the data and explains:
CoreLogic reports that 10.8 million, or 22.5 percent, of all residential properties with mortgages were in negative equity at the end of the third quarter of 2010, down from 11.0 million and 23 percent in the second quarter. This is due primarily to foreclosures of severely negative equity properties rather than an increase in home values.
In other words, fewer mortgages are underwater -- not because home values are increasing or borrowers are paying down their balances -- but because foreclosures are so high. So there's a silver lining for you: fewer mortgages are underwater because more borrowers are drowning.
Read the full report (which includes some nice charts) at CoreLogic.