Underwater mortgages in metro area drop to 21% in 3Q
THE NUMBER OF residential properties with an underwater mortgage in the Providence-New Bedford-Fall River metropolitan area dropped 0.5 percentage points to 21 percent during the third quarter of 2012, according to CoreLogic.
PROVIDENCE – In the third quarter of 2012, 21 percent of the residential properties with a mortgage in the Providence-New Bedford-Fall River area were underwater, CoreLogic said Thursday.
In the metropolitan area, 73,375 residential properties were in negative equity in the third quarter of 2012, a decline of 0.5 percentage points compared with the 74,923 properties that were underwater during the second quarter of 2012.
Statewide in Rhode Island, 50,766, or 22.1 percent, of residential properties with a mortgage were underwater during the third quarter, a 0.5 percentage point drop from the 51,727, or 22.6 percent, of properties reported in negative equity during the second quarter.
In addition to underwater homes, 8,626, or 3.8 percent, of residential properties have near-negative equity, with values within 5 percent of their outstanding loan balances.
Rhode Island had $66.47 billion in total residential property in the third quarter and $39.32 billion in outstanding mortgage debt, for a loan-to-value ratio of 65 percent.
Massachusetts also saw the percentage of negative equity homes drop slightly during the quarter. In the Bay State, 228,315, or 15.3 percent, of properties were underwater. This was a 0.3 percentage point drop from the 15.6 percent of properties underwater during the second quarter of 2012.
“Through the third quarter, the number of underwater borrowers declined significantly,” Mark Fleming, CoreLogic’s chief economist, said in prepared remarks. “The substantive gain in house prices made in 2012, partly due to tight inventory caused by negative equity’s lock-out effect, has paradoxically alleviated some of the pain.”
Nationwide, there were 10.67 million homes underwater in the third quarter, or 22 percent, down from 10.8 million, or 22.3 percent, in the second quarter of the year.
“There has been steady progress relative to reducing negative equity and its effects in 2012, but with nearly one-quarter of borrowers still underwater, we have a long way to go,” said Anand Nallathambi, president and CEO of CoreLogic, in a statement. “As we look ahead into 2013, we expect to continue to see more borrowers escape the negative equity trap, which will be a strong positive for the housing market specifically and the broader economy generally.”