CoreLogic Third Quarter 2011 Negative Equity Data Shows Slight Decline but Remains Elevated

-- Over Two-Thirds of Above-Average LTV Loans Have Above-Market Interest Rates --

(PRNewswire) — CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released negative equity data showing that 10.7 million, or 22.1 percent, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011. This is down slightly from 10.9 million properties, or 22.5 percent, in the second quarter. An additional 2.4 million borrowers had less than 5 percent equity, referred to as near-negative equity, in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 27.1 percent of all residential properties with a mortgage nationwide in the third quarter, down from 27.5 in the previous quarter.

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Negative equity, often referred to as "underwater" or "upside-down," is the condition in which borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

"Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness. The nearly $700 billion mortgage debt overhang has touched many corners of the market, and this overhang is holding back the recovery of the housing market and broader economy," said Mark Fleming, chief economist with CoreLogic.

Data Highlights

  • Nevada has the highest negative equity percentage with 58 percent of all of its mortgaged properties underwater, followed by Arizona (47 percent), Florida (44 percent), Michigan (35 percent) and Georgia (30 percent). This is the first quarter that Georgia entered the top five, surpassing California which had been in the top five since tracking began in 2009.
  • The top five states combined have an average negative equity ratio of 41.4 percent, while the remaining states have a combined average negative equity ratio of 17.6 percent.
  • There are nearly 22 million borrowers, or 45 percent of all borrowers, that have mortgages with an 80 percent or more loan-to-value (LTV) ratio, and 69 percent of those mortgages have above-market interest rates of 5 percent or more.  Conversely, only 54 percent of borrowers who have less than 80 percent LTV have above-market interest rates.  While above-market interest rates make refinancing at today's historically low rates a cost-effective step for qualified homeowners, it can be more difficult for borrowers with above-average LTV ratios to qualify for refinancing.
  • Of the 10.7 million borrowers in negative equity, there are 6.3 million first liens without home equity loans that have an average mortgage balance of $222,000. They are underwater by an average of $52,000 which equates to an average LTV ratio of 131 percent. The negative equity share for the first lien-only borrowers was 18 percent, and 40 percent had an LTV of 80 percent or higher.
  • The remaining 4.4 million negative equity borrowers hold first liens and home equity loans with an average mortgage balance of $309,000.  These borrowers are underwater by an average of $84,000 and have an average LTV of 137 percent.
  • The negative equity share for first lien borrowers with home equity loans is 38 percent, or twice the share for first lien-only borrowers. Over 60 percent of borrowers with home equity loans have combined LTVs of 80 percent or higher.
  • Of the total $699 billion in aggregate negative equity, first liens without home equity loans account for $329 billion aggregate negative equity, while first liens with home equity loans account for $370 billion. CoreLogic estimates that of the $370 billion first liens with home equity loans, $190 billion is due to the first lien component.
  • There are 8.6 million conventional loans in a negative equity position that have an average mortgage balance of $272,000 and are underwater by an average of $70,000.
  • There are 1.5 million FHA loans in a negative equity position that have an average mortgage balance of $170,000 and are underwater by an average of $26,000.
  • Given that bank portfolios account for 15 percent of all first lien mortgage loans, CoreLogic estimates that 1.6 million properties valued at $105 billion of aggregate negative equity are in bank portfolios[1].

 

Q3 2011 Negative Equity by State*

 

Properties With a Mortgage Outstanding

$ Outstanding

STATE

Mortgages

Negative Equity Mortgages

Near** Negative Equity Mortgages

Negative Equity Share

Near** Negative Equity Share

Total Property Value

Mortgage Debt Outstanding

Net Homeowner Equity

Loan-to-Value Ratio

Alabama

358,906

40,299

20,672

11.2%

5.8%

67,462,463,091

46,032,537,450

21,429,925,641

68.2%

Alaska

90,464

6,746

4,731

7.5%

5.2%

25,004,308,045

16,535,988,006

8,468,320,039

66.1%

Arizona

1,311,111

617,876

64,717

47.1%

4.9%

248,924,664,162

228,975,896,371

19,948,767,791

92.0%

Arkansas

251,514

24,779

14,168

9.9%

5.6%

40,223,246,758

28,988,870,614

11,234,376,144

72.1%

California

6,827,170

2,030,292

314,769

29.7%

4.6%

2,768,657,100,640

1,955,695,397,291

812,961,703,349

70.6%

Colorado

1,150,887

234,275

88,682

20.4%

7.7%

308,290,782,962

222,563,123,784

85,727,659,178

72.2%

Connecticut

824,713

106,772

30,197

12.9%

3.7%

290,388,192,179

174,857,193,281

115,530,998,898

60.2%

Delaware

183,115

26,008

9,009

14.2%

4.9%

48,121,164,127

32,109,846,143

16,011,317,984

66.7%

Florida

4,356,307

1,911,419

182,144

43.9%

4.2%

822,014,446,617

713,039,628,681

108,974,817,936

86.7%

Georgia

1,628,145

488,310

114,345

30.0%

7.0%

312,549,105,168

252,223,069,604

60,326,035,564

80.7%

Hawaii

228,758

22,786

7,415

10.0%

3.2%

120,445,701,101

64,929,754,465

55,515,946,636

53.9%

Idaho

254,797

56,526

12,119

22.2%

4.8%

51,244,447,455

36,448,857,921

14,795,589,534

71.1%

Illinois

2,245,304

481,810

109,770

21.5%

4.9%

518,451,905,803

374,606,690,621

143,845,215,182

72.3%

Indiana

634,711

67,582

27,851

10.6%

4.4%

96,988,778,464

67,094,557,127

29,894,221,337

69.2%

Iowa

381,157

34,899

15,697

9.2%

4.1%

58,026,856,543

39,163,208,940

18,863,647,603

67.5%

Kansas

302,453

29,964

14,791

9.9%

4.9%

54,864,841,222

38,298,261,860

16,566,579,362

69.8%

Kentucky

293,991

25,220

13,461

8.6%

4.6%

50,335,521,475

34,094,114,202

16,241,407,273

67.7%

Louisiana

NA

NA

NA

NA

NA

NA

NA

NA

NA

Maine

NA

NA

NA

NA

NA

NA

NA

NA

NA

Maryland

1,360,482

315,353

68,255

23.2%

5.0%

424,450,681,334

297,383,155,504

127,067,525,830

70.1%

Massachusetts

1,495,576

233,265

52,953

15.6%

3.5%

539,260,228,190

334,421,627,415

204,838,600,775

62.0%

Michigan

1,381,925

477,104

72,107

34.5%

5.2%

198,955,748,678

165,888,791,621

33,066,957,057

83.4%

Minnesota

587,972

96,053

30,454

16.3%

5.2%

129,770,956,234

86,965,954,092

42,805,002,142

67.0%

Mississippi

NA

NA

NA

NA

NA

NA

NA

NA

NA

Missouri

786,891

123,103

43,589

15.6%

5.5%

137,648,435,436

98,771,865,633

38,876,569,803

71.8%

Montana

118,036

9,877

4,149

8.4%

3.5%

29,649,935,161

17,865,479,184

11,784,455,977

60.3%

Nebraska

225,718

22,552

14,083

10.0%

6.2%

35,778,757,524

26,337,366,585

9,441,390,939

73.6%

Nevada

563,330

328,369

26,815

58.3%

4.8%

101,245,838,111

111,588,530,730

-10,342,692,619

110.2%

New Hampshire

220,958

42,410

12,097

19.2%

5.5%

53,183,318,373

37,550,051,826

15,633,266,547

70.6%

New Jersey

1,889,307

308,187

80,573

16.3%

4.3%

666,352,278,414

418,960,948,428

247,391,329,986

62.9%

New Mexico

247,593

33,255

11,327

13.4%

4.6%

56,720,288,424

38,367,000,911

18,353,287,513

67.6%

New York

1,892,081

118,764

43,318

6.3%

2.3%

846,252,706,130

412,125,320,987

434,127,385,143

48.7%

North Carolina

1,582,729

187,608

105,717

11.9%

6.7%

322,490,180,666

231,101,756,662

91,388,424,004

71.7%

North Dakota

61,885

4,281

1,508

6.9%

2.4%

11,472,307,949

6,603,348,037

4,868,959,912

57.6%

Ohio

2,207,067

498,174

135,017

22.6%

6.1%

314,359,611,944

238,803,739,969

75,555,871,975

76.0%

Oklahoma

419,767

30,550

21,676

7.3%

5.2%

61,038,016,866

43,927,984,952

17,110,031,914

72.0%

Oregon

700,940

118,854

39,867

17.0%

5.7%

176,048,602,491

122,676,307,464

53,372,295,027

69.7%

Pennsylvania

1,842,399

146,333

67,309

7.9%

3.7%

400,989,222,777

245,683,275,124

155,305,947,653

61.3%

Rhode Island

228,819

48,950

8,602

21.4%

3.8%

63,282,914,912

40,419,422,198

22,863,492,714

63.9%

South Carolina

629,235

97,323

41,062

15.5%

6.5%

134,394,752,146

95,734,715,921

38,660,036,225

71.2%

South Dakota

NA

NA

NA

NA

NA

NA

NA

NA

NA

Tennessee

995,699

146,458

69,508

14.7%

7.0%

170,295,331,149

122,037,114,844

48,258,216,305

71.7%

Texas

3,374,369

321,551

163,866

9.5%

4.9%

630,830,782,078

426,101,237,859

204,729,544,219

67.5%

Utah

480,030

94,755

29,382

19.7%

6.1%

117,285,126,274

84,595,806,220

32,689,320,054

72.1%

Vermont

NA

NA

NA

NA

NA

NA

NA

NA

NA

Virginia

1,313,344

300,924

79,582

22.9%

6.1%

428,876,147,610

306,786,490,749

122,089,656,861

71.5%

Washington

1,421,952

245,694

82,310

17.3%

5.8%

428,995,036,062

293,355,056,213

135,639,979,849

68.4%

Washington,DC

100,122

13,907

4,217

13.9%

4.2%

49,184,504,158

28,802,927,248

20,381,576,910

58.6%

West Virginia

NA

NA

NA

NA

NA

NA

NA

NA

NA

Wisconsin

658,097

95,551

32,375

14.5%

4.9%

124,290,356,706

85,956,848,153

38,333,508,553

69.2%

Wyoming

NA

NA

NA

NA

NA

NA

NA

NA

NA

US

48,538,194

10,723,410

2,404,281

22.1%

5.0%

12,622,177,727,736

8,805,638,769,219

3,816,538,958,517

69.8%

 

*This data only includes properties with a mortgage. Non-mortgaged properties are by definition not included.

** Defined as properties in negative equity or within 5% of being in a negative equity position.



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