Real Estate News

Multiple reports show 'underwater mortgages' abating

Published: 17 Feb 2017

When a mortgage owner accrues more in debt than the market value of their property, the person may be "underwater." It can be a problem for residents, and a recent report looked at the changes in these rates seen over the last year. Fortunately for buyers, the amount of mortgage holders stuck underwater appears to be going down, at least according to ATTOM Data Solutions.

In a Feb. 7 press release, the company reviewed the results of its most recent Year-End Home Equity & Underwater Report. Although the amount of underwater properties grew between the end of 2015 and the beginning of 2016, by last December the number was at a four-year low of around 5.4 million properties.

It's important to note that these properties were classified as being "seriously underwater," meaning that their total loan amount was a full quarter percentage higher than the market value, or more.

ATTOM Senior Vice President Daren Blomquist described the overall trend this latest development represents for the industry.

"Since home prices bottomed out nationwide in the first quarter of 2012, the number of seriously underwater U.S. homeowners has decreased by about 7.1 million, an average decrease of about 1.4 million each year," he said.

"Meanwhile, the number of equity rich homeowners has increased by nearly 4.8 million over the past three years, a rate of about 1.6 million each year," he added.

Another term for underwater mortgages is "negative equity.' A December Zillow report the end of 2016 also showed a similar downward trend for this figure, tracking the overall percentage of homes with negative equity. In 2012, the source said, this accounted for more than 31 percent of the market, whereas in the third quarter of 2016 this number was just under 11 percent.