Fewer homeowners with so-called underwater mortgages — where the amount owed on the mortgage exceeds the home’s value — is nevertheless a positive for the housing market as it could portend fewer defaults and foreclosures down the road.
The percentage of American single-family homes with mortgages in negative equity fell to 21.5 percent in the second quarter from 23.3 percent in the first quarter and 23 percent a year ago, according to the Zillow Real Estate Market Reports.
These underwater mortgages are one of the biggest banes of homeowners since negative equity makes many of them unqualified for home loan refinancing and prevents some from selling.
“While fewer homeowners were underwater in the second quarter than the first, it is not yet time to break out the champagne bottle,” Stan Humphries, Zillow chief economist, told Reuters in an interview.
“While some of the downward pressure on negative equity is coming from stabilization in home value trends, the larger factor is the enormous volume of foreclosures occurring within the stock of homes in negative equity,” he said.
Article from MSNBC via Reuters. Written by Julie Haviv
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