CoreLogic has released a new analysis showing approximately 100,000 more borrowers reached a state of positive equity during the third quarter of 2012, adding to the more than 1.3 million borrowers that moved into positive equity through the second quarter of 2012. This brings the total number of borrowers who moved from negative equity to positive equity September year-to-date to 1.4 million. The analysis also shows 10.7 million, or 22 percent of all residential properties with a mortgage, were in negative equity at the end of the third quarter of 2012. This is down from 10.8 million properties, or 22.3 percent, at the end of the second quarter of 2012. An additional 2.3 million borrowers had less than 5 percent equity in their home, referred to as near-negative equity, at the end of the third quarter.
Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages 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.
Together, negative equity and near-negative equity mortgages accounted for 26.8 percent of all residential properties with a mortgage nationwide in the third quarter of 2012, down from 27 percent at the end of the second quarter in 2012. Nationally, negative equity decreased from $689 billion at the end of the second quarter in 2012 to $658 billion at the end of the third quarter, a decrease of $31 billion. This decrease was driven in large part by an improvement in house price levels.This dollar amount represents the total value of all homes currently underwater nationally.