40% of underwater borrowers hold home equity loans

by KERRI PANCHUK

Homeowners who took out home equity loans for additional financing represent 40% of all borrowers who are now underwater, owing more on their homes than they are worth, data firm CoreLogic said Tuesday.

The data analytics firm said 10.9 million, or 22.7%, of all residential properties were underwater in the first quarter, down from 11.1 million in the fourth quarter.

About 2.4 million borrowers hold less than 5% equity, meaning they are near-negative equity on their properties, placing them at higher risk.

"Together, negative equity and near-negative equity mortgages accounted for 27.7% of all residential properties with a mortgage nationwide," CoreLogic said. In the fourth quarter, these two categories stood at 27.9%."

Housing analysts have long argued for more attention to be paid to pending defaults in the second lien industry.

Nationwide, Nevada had the highest percentage of underwater properties, with 63% of all mortgages valued higher than the properties are worth. Arizona and Florida followed with negative equity rates of 50% and 46%, respectively.

The average negative equity borrower has a home mortgage that is upside down by $65,000. New York borrowers are facing the greatest losses, with the average home upside down by $129,000. Massachusetts and Connecticut homeowners are underwater by about $120,000 and $111,000 on average.

URL to original article: http://www.housingwire.com/2011/06/07/40-of-underwater-borrowers-hold-home-equity-loans

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