Alert: May 10, 2010
CORELOGIC DATA SHOWS DECLINE IN NEGATIVE EQUITY
CoreLogic* reported today that more than 11.2 million, or 24
percent, of all residential properties with mortgages, were in
negative equity at the end of the first quarter of 2010, down
slightly from 11.3 million and 24 percent from the fourth quarter of
2009. An additional 2.3 million borrowers had less than five percent
equity. Together, negative equity and near-negative equity mortgages
accounted for over 28 percent of all residential properties with a
Negative equity, often referred to as "underwater" or "upside
down," means that borrowers owe more on their mortgage 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.
In Sacramento--Arden-Arcade--Roseville, 44.8 percent, or 222,076,
of all residential properties with a mortgage were in negative
equity for Q1 2010. An additional 4.4 percent, or 21,865, were in
near negative equity in Sacramento--Arden-Arcade--Roseville.
National Data Highlights
- Negative equity continues to be concentrated in five states:
Nevada, which had the highest percentage negative equity with 70
percent of all of its mortgaged properties underwater, followed by
Arizona (51 percent), Florida (48 percent), Michigan (39 percent)
and California (34 percent). Las Vegas remains the top ranked CBSA
with 75% of mortgaged properties being underwater, followed by
Stockton (65%), Modesto (62%), Vallejo-Fairfield (60%) and Phoenix
(58%). Phoenix had more than 550,000 underwater borrowers, the
most households of any metropolitan market in the country.
Riverside (463,000), Los Angeles (406,000) Atlanta (399,000) and
Chicago (365,000) round out the top five markets.
- The share of borrowers whose mortgage debt exceeds the
property value by 25% or more fell slightly to 10.4% or 4.9
million borrowers, down from 10.6% or 5 million borrowers. The
aggregate dollar value of negative equity for these deeply
underwater borrowers was $656 billion dollars.
- The negative equity share for borrowers with junior liens,
such as closed end second liens or home equity lines of credit
(HELOC), was 38% compared to 19% for borrowers that did not have a
junior lien. The foreclosure rate for borrowers with junior liens
was 4%, compared to 2% for borrowers without junior liens.
"The two most important triggers of default, negative equity and
unemployment, have stabilized over the last six months. As house
prices grow again and borrowers pay down their mortgage debt
negative equity levels will begin to diminish. The typical
underwater borrower is likely to regain their lost equity over the
next five to seven years," said Mark Fleming, chief economist with
State and top 50 CBSA negative equity data is available on
www.corelogic.com at the following address: http://www.corelogic.com/About-Us/ResearchTrends/Negative-Equity-Report.aspx.
*Note: First American CoreLogic is now a part of CoreLogic, Inc.
and will be separating from The First American Corporation.
CoreLogic will continue to be the most comprehensive source of U.S.
real estate, mortgage application, fraud and loan performance data.
As CoreLogic, the company is larger and more diverse, encompassing
more than 20 different business entities in the areas of data,
analytics and information services. As CoreLogic, the company is
also a leading provider of automotive credit reporting, property
tax, valuation, flood determination and geospatial analytics. On
June 1, 2010 CoreLogic expects to officially split off from First
American and become a publicly traded company listed on the NYSE
under the symbol CLGX.
CoreLogic's data includes 47 million properties with a mortgage,
which accounts for over 85 percent of all mortgages in the U.S.**
CoreLogic used its public record data as the source of the mortgage
debt outstanding (MDO) and it includes 1st mortgage liens and junior
mortgage liens and is adjusted for amortization and home equity
utilization in order to capture the true level of mortgage debt
outstanding for each property. The current value was estimated by
using the First American CoreLogic Automated Valuation Models (AVM)
for residential properties. The data was filtered to include only
properties valued between $30,000 and $30 million because AVM
accuracy tends to quickly worsen outside of this value range.
The amount of equity for each property was determined by
subtracting the property's estimated current value from the mortgage
debt outstanding. If the mortgage debt was greater than the
estimated value, then the property is in a negative equity position.
The data was created at the property level and aggregated to higher
levels of geography.
** Only data for mortgaged residential properties that
have an AVM value is presented. There are several states where the
public record, AVM or mortgage coverage is thin. Although coverage
is thin, these states account for fewer than 5 percent of the total
population of the U.S.