Negative equity fell for the third consecutive quarter, according to a report released today by CoreLogic, but it wasn’t necessarily good news.
The company said 10.8 million, or 22.5 percent, of all residential properties with mortgages were in a negative equity position as of the end of the third quarter, down from 11.0 million and 23 percent a quarter earlier.
The improvement, if you want to call it that, was due primarily to “foreclosures of severely negative equity properties,” not an increase in home values.
In other words, homes that were beyond the point of no return went back to the mortgage lenders who provided the mortgages.
That said, the largest declines in negative equity took place in the hardest-hit areas of the country, including Alaska (-1.8%), Nevada (-1.6%), Arizona (-1.4%), California (-1.2%), and Florida (-0.9%).
And negative equity remains concentrated in five states, with the share of mortgaged properties underwater as follows: Nevada (67%), Arizona (49%), Florida (46%), Michigan (38%), and California (32%).
During the course of the year, the number of negative equity borrowers has fallen by over 500,000 borrowers, but again many could be tied to foreclosure.
Additionally, 2.4 million borrowers were “near negative equity,” which is defined as having less than five percent home equity.
When combined, negative equity and near-negative equity mortgages accounted for more than a quarter (27.5%) of all residential properties with a mortgage nationwide.
Overall, the aggregate total of negative equity declined three percent to $744 billion during the third quarter, and is down seven percent from the end of 2009 when it stood at $800 billion.