Foreclosures and Distress Properties on the rise

Number of ‘Under Water’ Borrowers rises. – Mar 1 – By Alan Zibel

The number of U.S. homeowners owing more on their home loans than their properties are worth increased at the end of last year, highlighting a continuing source of weakness for the economy. CoreLogic, a real estate data provider, said Thursday that 11.1 million, or 22.8%, of American households with a mortgage were “under water” at the end of last year. That was up from 10.7 million, or 22.1%, of properties in the third quarter of 2011.

In addition, fourth-quarter data showed that about 2.5 million borrowers had less than 5% equity in their homes, CoreLogic said. The figures were the highest level of negative equity since the third quarter of 2009. Negative equity is closely linked with foreclosures, since homeowners without equity in their properties have trouble refinancing or selling their homes in the event they lose their job or need to relocate.

Of those “under water” borrowers, 6.7 million had no second mortgage. They owed 130% of their property’s value on average. The remaining 4.4 million had two loans. On average, they owed 138% of their property’s value.

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