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Negative Equity Share Improves Again

A reduction in the number of borrowers with loan-to-value ratios in excess of 100 percent during the first three months of 2012 continued into the second quarter. More than a million mortgages have moved out of the red so far this year.

Properties with loan balances in excess of the property value accounted for 22.3 percent of all financed homes as of June 30, improving for the second consecutive quarter from three months earlier when the negative equity share was 23.7 percent.

The underwater figure was 22.5 percent in the same period in 2011.

Santa Ana, Calif.-based CoreLogic reported the negative-equity numbers Wednesday.

After 600,000 borrowers moved from a negative-equity position to positive equity, 10.8 million properties still were upside-down in the latest period — including 4.2 million first liens with second liens behind them. There were 11.4 million negative-equity properties in the quarter ended March 1, and the year-earlier number was 10.9 million.

Aggregate negative equity as of June 30 was $689 billion, including $353 million in first liens with subordinate financing behind them. The aggregate total was off from $691 million as of the end of March.

CoreLogic said that 600,000 borrowers moved from a negative-equity position to positive equity, bringing to 1.3 million the number of borrowers who have become solvent during 2012. CoreLogic Chief Economist Mark Fleming attributed the improvement to “surging home prices this spring and summer, lower levels of inventory, and declining REO sale shares.”

Anand Nallathambi, president and chief executive officer of CoreLogic, said that a 5 percent increase in national home prices would propel nearly 2 million more people into a positive equity status.

Around 2.3 million mortgages had an LTV ratio of between 95 percent and 100 percent, a category that CoreLogic describes as “near-negative equity.”

Enhancements to the Home Affordable Refinance Program announced in October 2011 increased the number of eligible borrowers from 17 million to 22 million.

Borrowers with homes valued at less than $200,000 had a negative-equity rate of nearly a third versus 17 percent for borrowers whose homes are valued at more than $200,000.

The state with the worst share of negative equity properties was Nevada, though the proportion declined to 58.6 percent from 61.2 percent in the first quarter. Florida followed, falling from 45.1 percent to 42.7 percent. After that was Arizona’s 39.7 percent, Georgia’s 35.8 percent and Michigan’s one-third.

More than a third of the nation’s negative-equity properties are located in the five-worst states.

Another report from Lender Processing Services released Tuesday indicated that Nevada’s negative-equity share was 54.7 percent in July, while Georgia’s was 42.8 percent. Florida had a one-third rate, then Michigan’s 29.8 percent and Arizona’s 28.4 percent.

CoreLogic’s data indicated that North Dakota’s 5.5 percent negative-equity share was the lowest of any state.

CoreLogic noted that U.S. delinquency for negative-equity borrowers was 15.1 percent, falling from 15.2 percent at the end of the first quarter.

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