Fewer homeowners are underwater

Mortgage borrowers with negative equity are sometimes forced into moving because the value of the home is lower than the amount they owe on their mortgage.

A new report from CoreLogic indicates that fewer homeowners are finding themselves in that predicament. Negative equity has fallen for two consecutive quarters, said the report, with 23 percent of all properties in the country holding underwater mortgages in the second quarter. That percentage was down from the first quarter, when 24 percent of all borrowers were underwater.

Nevada continued to be a hotspot for negative equity, with 68 percent of all mortgages in that state underwater. But the state also experienced an 11.8 percent decline in negative equity, by far the largest decrease seen in any state. Fifty percent of borrowers in Arizona are underwater, but that state's negative equity share declined by only 1.3 percent.

Nationwide, two-thirds of all states saw declines in negative equity, although the report cautioned that it was not due to market stabilization. In fact, the decline in underwater mortgages is most likely the result of a rise in foreclosures, which has forced some families into moving out of their homes.

Foreclosures are expected to continue to rise as more homeowners struggle to pay their mortgage. RealtyTrac predicts that more than 1 million properties will go through foreclosure before the end of the year.


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