The share of U.S. properties that were valued at less than their mortgage balances has grown. But despite deterioration in the collective equity position, the latest incarnation of the government’s refinance program has an additional 4 million upside-down borrowers potentially qualifying for the program.
U.S. properties with loan balances higher than their values accounted for 22.8 percent of all financed residential properties in the fourth quarter.
The negative-equity proportion was slightly higher than 22.1 percent in the third quarter.
According to CoreLogic, which reported the data in a quarterly negative-equity report, with more than 60 percent of its borrowers in a negative-equity position, Nevada had the worst rate.
Arizona trailed with nearly half of its financed residential properties having a loan balance that exceeded the home’s value.
After that was Florida’s 44 percent negative-equity rate, then Michigan’s 35 percent and Georgia’s one-third.
New York had lowest share of borrowers who were upside-down:Â 6.4 percent.
The U.S. total worked out to 11.1 million upside-down homeowners with $2.8 trillion in mortgages as of the fourth quarter versus 10.7 million underwater loans for $2.7 trillion three months prior.
Borrowers without home-equity loans had an average LTV of 130 percent, while the combined LTV ratio increased to 138 percent for borrowers who had both a first lien and a HEL.
Home prices felt downward pressure because of a seasonal slump and a slowing foreclosure pipeline, CoreLogic Chief Economist Mark Fleming explained in the report. The result was a worsening negative-equity share.
“The negative-equity share is back to the same level as Q3 2009, which is when we began reporting negative equity using this methodology,” Fleming said. “The high level of negative equity and the inability to pay is the ‘double trigger’ of default, and the reason we have such a significant foreclosure pipeline.
“While the economic recovery will reduce the propensity of the inability to pay trigger, negative equity will take an extended period of time to improve, and if there is a hiccup in the economic recovery, it could mean a rise in foreclosures.”
There wasn’t much change from the 11.0 million borrowers with loan-to-value ratios in excess of 100 percent during the fourth-quarter 2010.
When factoring in borrowers with less than 5 percent equity, CoreLogic said that the share jumped past a quarter as of the end of last year.
The mortgage service provider reported that the expansion of the Home Affordable Refinance Program increased the pool of potential participants to more than 22 million from 18 million before HARPÂ 2.0.
Total loans outstanding on all U.S. residential properties tracked by CoreLogic — which says its findings were based on data from 48 million financed properties accounting for more than 85 percent of all U.S. mortgages — were $8.8068 trillion as of Dec. 31.
Corresponding home values, determined using automated-valuation models, were $12.5209 trillion, leaving $3.7140 trillion in home equity.
