20% of Rhode Island houses ‘underwater’

PROVIDENCE – One in five Rhode Island homeowners holding mortgages owed more than their homes were worth at the end of the third quarter, CoreLogic said Monday.
Across Rhode Island, 45,511 homes, or 20 percent of all mortgaged properties, had negative equity, the California research company said. An additional 8,120 homeowners were within 5 percent of entering negative equity.
Homeowners whose properties are worth less than the amount owed on them – which includes original mortgages as well as second mortgages or home equity loans – are often said to be “underwater.” It can happen because home values decline, because mortgage debt rises, or from some combination of both.
Across the nation, CoreLogic said that 10.8 million, or 22.5 percent, of all residential properties with mortgages were underwater at the end of the third quarter, down from 11 million and 23 percent in the second quarter.
But the company said it was the sale of underwater homes at foreclosure auctions – not rising home prices – that drove down the number of upside down homes.
“Negative equity is a primary factor holding back the housing market and broader economy,” said Mark Fleming, chief economist with CoreLogic. “The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity.”