REO Proteams: Las Vegas Real Estate News

Things are certainly not good on all fronts as reports say that 1 in 4 homeowners owe their banks more than their homes are worth. This could certainly hurt the housing markets recovery, as millions of homeowners may find themselves walking away from their homes.

Reports released last Tuesday say that 23% of homeowners owe more than their house is worth. This could be a signal of impending foreclosures in the future as the numbers of foreclosures have been steadily shrinking the previous months.

With home prices at its lowest in decades, more and more homeowners find themselves paying for homes whose mortgage is greater than their homes worth. This has become worrisome as home values continue to drop from their original values nationwide.

Negative equity or “Underwater” mortgage

First American CoreLogic in a report says that 10.6 million mortgages were underwater as of September. Most of these homes are located in the five states hardest hit by the current housing markets meltdown. Nevada, leads all states at 65%; followed closely by Arizona, at 48%; Florida, at 45%; Michigan, at 37%; and California closes the list with 35%.

These states were hosts to numerous home building projects during the housing boom. Homes were purchased at their previously high prices and homeowners have seen the market values of these homes dwindle over the years.

Another 2.3 million homes are within the negative 5%. This two figures account for nearly 28% of homes with mortgages nationwide. Home prices have been hiking up steadily during the summer months, traditionally strong months for home sales.

Foreclosures have been steadily dwindling since seeing their numbers increase with the start of the crisis. The report cited a survey by First American CoreLogic, a Santa Ana, Calif.-based real estate information company, also said that more than 520,000 of the borrowers have received a default notice.

Positive outlook

Efforts to curb the number of foreclosures have been seeing some progress as numbers have been slowly dropping the last months. Government programs such as the Making Homes Affordable program has proven to be successful in helping homeowners restructure their mortgages.

CoreLogic revised its methodology for the third quarter — now it accounts for payments that reduce principal, and it no longer assumes home equity credit lines have been maxed out. Using the old method, 33.8% of borrowers would have been underwater in the third quarter compared with 32.2% in the previous quarter, according to a CoreLogic spokeswoman.

With home prices expected to rise in the coming months and the real estate market stabilizing, the numbers of homes with “underwater” mortgages are expected to drop.

Reported by REOProteams

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