Foreclosures make the figures “better”

Negative equity in their housing loans is affecting 10.8 million, or 22.5 percent, of all residential properties with mortgages in the United States according to an overnight report from CoreLogic. While this is down from down from 11.0 million and 23 percent in the second quarter, this is due primarily to foreclosures of severely negative equity properties rather than an increase in home values.

During this year the number of borrowers in negative equity has declined by over 500,000 borrowers. An additional 2.4 million borrowers had less than five percent equity in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 27.5 percent of all residential properties with a mortgage nationwide.

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“Negative equity is a primary factor holding back the housing market and broader economy. 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,” said Mark Fleming, chief economist with CoreLogic.