11.3 million homeowners underwater on mortgage
More than 11.3 million homeowners — nearly one-fourth of all Americans with a mortgage — owe more on their loan than their home is now worth, according to a recent report released by FirstAmerican CoreLogic.
More than 10 percent of people with mortgages owe 25 percent more than their home is worth.
The number of underwater mortgages increased by about 620,000 from the third quarter, the firm said. An additional 2.3 million mortgages had less than 5 percent equity in their home, which could be wiped out if home prices fall further.
Once the mortgage is underwater, owners cannot easily sell their home or refinance their loan.
Underwater mortgages are concentrated in few states: California, Florida, Nevada, Arizona, Michigan and Georgia. In Nevada, 70 percent of mortgages were underwater. In California, more than a third of mortgages were underwater.
In Washington state, nearly a quarter of a million homeowners are upside down on their mortgages, representing 15.9 percent of homes. The rate is slightly lower, at 15.1 percent, for the Seattle-Bellevue-Everett metropolitan area.
“The rise in negative equity is closely tied to increases in pre-foreclosure activity,” CoreLogic said. Once a homeowner owes 25 percent more than the house is worth, foreclosure rates rise sharply.
Negative equity exceeded 25 percent in six states and topped 20 percent in six others.
Contributing to the upside-down mortgages has been the decline in home prices, which peaked nationally in Summer 2006.
Only in the last half of 2009 did the trend show signs of turning around.
According to the latest Standard & Poor’s/Case-Shiller 20-city home-price index, home prices across the U.S. rose for the seventh straight month in December.
In the Seattle market, which includes King, Snohomish and Pierce counties, the seasonally adjusted index was 148.37, up 0.2 percent from November and 0.8 percent from its bottom in September.
The 20-city index was off 3.1 percent for the year from December 2008, while in Seattle, prices were down 7.9 percent over that same period. But that was an improvement over the one-year drop of 10.6 percent from November 2008 to November 2009 in the Seattle area.