Wednesday, September 11, 2013 at 6:47 AM
The percentage of homeowners who owe their mortgage lenders more than their homes are worth - what's known as negative equity - is declining in Ohio and across the country. ideastream's Bill Rice has the latest numbers from the real estate tracking firm CoreLogic.
It’s been slow going for American homeowners trying to climb out from under the burden of their upside down mortgages. But Sam Khater, chief economist at CoreLogic, says progress has picked up as the housing market has improved.
Khater 1: The number of negative equity borrowers, or upside down borrowers, declined by 2.5 million down to 7.1 million, or about 15 percent of all borrowers. Last quarter it was at 20 percent of all borrowers. So in the first half of 2013 large declines, but prior to that, slow declines.
Ohio’s numbers mirror the national decline. Statewide, underwater mortgages fell six points from the 1st to second quarter of this year, from 25 percent to 19 percent. In specific metro areas, Cleveland experienced a 7 percent drop, Akron six percent, and Columbus 7 percent.
Khater says the reason for the fall in negative equity is simple - market values are rising to levels closer to borrowers’ outstanding balances, in some cases crossing over into positive territory.
All this is good news for the real estate industry and the economy. But Khater says homeowners whose mortgages are only marginally above water still feel pinched - they’ll lose money if they sell, because the original value fell so far, and it’s still difficult for them to refinance to today’s lower interest rate.
Khater 3: The irony of the very low rate environment that the government has pushed and advocated is that those that need it the most are the ones least able to take advantage of the low rate environment. So that’s why HARP is there, to allow borrowers to take advantage of that low rate environment.
HARP is the federal government’s Home Affordable Refinance Program, which so far has helped 2.7 million homeowners refinance. But if you’re thinking “hey, that’s for me,” there’s a catch. If your mortgage isn’t owned or guaranteed by federal lenders Fannie Mae or Freddie Mac, you’ll be out of luck. You’re not eligible.
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