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September 14, 2011

Md. has seventh-highest share of underwater homeowners

Nearly one in four Marylanders with a mortgage owed more on those loans than their homes were worth this spring, worse than all but six other states -- and a large number of homeowners who can't easily sell or refinance.

That's according to new figures from real estate data firm CoreLogic, which estimates that nearly half the states have fewer than 15 percent of their borrowers "underwater."

But the state's nearly 24 percent figure -- essentially unchanged from the first three months of the year -- remains much lower than the hardest-hit states. Sixty percent of Nevada's homeowners with a mortgage owe more than their homes are worth. Nearly half of Arizona's homeowners are in similar straits.

Several factors are contributing to states' negative equity: Falling home prices, low down payments and loans homeowners took out against their properties when the market was hot. 

One result is homeowners stuck in place, unable to sell unless they bring money to the settlement table or convince their lender to approve a short sale.

"Since the 2005 sales peak, non-distressed sales in zip codes with low negative equity have fallen 61 percent, compared to an 83 percent sales decline in high negative equity zip codes," CoreLogic said in a press release. "The typical seasonal changes in sales volume in high negative equity zip codes is very muted, which indicates that non-distressed sales are being heavily impacted by the high levels of negative equity in their neighborhood, even if sellers have equity."

Another problem for the underwater crowd: Good luck trying to refinance to take advantage of low mortgage rates.

"Negative equity significantly limits the ability of borrowers to capture the benefit of the low-rate environment," CoreLogic notes.

The company estimates that nearly 75 percent of all underwater borrowers have mortgage rates that are "above market," or at least 5.1 percent, at a time when the going rate is 4.1 percent. That's eight million borrowers who could be paying less money on housing costs each month if they had enough equity to refinance.

Maryland has ranked in the top 10 on CoreLogic's negative-equity list for a while. The company estimated that the state was eighth in the country during the first three months of the year, but Idaho's negative-equity share has fallen modestly since then, dropping it from seventh to ninth while Maryland bumped up a notch. Virginia is between the two states, with 23 percent of its borrowers underwater, CoreLogic's estimates show.

The Baltimore region is better off than the state as a whole. Nineteen percent of the metro area's borrowers had homes worth less than their mortgages during the spring, about 121,000 in all, CoreLogic says. That's essentially the same as the situation at the start of the year. (Maryland's tally of underwater homeowners: 321,000.)

A shrinking share of underwater homeowners isn't necessarily good news the way most people would define it. Nevada's 60 percent share is down from 68 percent a year earlier, but CoreLogic notes that the reason "is the high number of foreclosures that led to lower numbers of remaining negative equity borrowers."

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Mortgages, Underwater


I'm glad you are bringing the light to this problem in Maryland. I deal with distressed property homeowners in a daily basis and the biggest revelation for me is about the tremendous difference between classes in Maryland. This mortgage's meltdown affects everyone but the poor and mostly minorities have felt the blunt force of it being upfront. .
There is a big difference between a homeowner that lost $100,000 in equity and being a major inconvenience. . to a poor family that has lost $50,000 in equity. .and they are losing their home and don't have no where to go!
The kids are the one that suffers the most. . try going to school not knowing if you have a house when you come back after school. .the stress is changing these kids..
Behind the 7th position for homes underwater in Maryland. .there are real people that are really suffering. .
Just my 2 cents worth. .
Fernando Herboso

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie

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