Upside-down rate goes inside out
Posted on November 24, 2009 at 12:43 pmFirst American CoreLogic released its quarterly negative-equity report today, saying 22.6 percent of the nation’s mortgages as underwater — far lower than the second quarter. An encouraging sign on its face, except First American revised its methodology for determining when a mortgage does upside down.
[The new] proprietary model … factors in loan amortization and utilization rates for home equity lines of credit (HELOC), providing a more precise view of “underwater borrowers.”
Under the older methodology — which didn’t use amortization or lines-of-credit data — the underwater rate would have been 33.8 percent.
In Tennessee, things are much better by comparison. The report shows 13.2 percent of Tennesseans in a negative-equity situation. That is, however, higher than most of the eight states bordering Tennessee; only Georgia and Virginia were higher, both hovering near 24 percent (no data was available for Mississippi).
The change in method paid big dividends for the Nashville area, too. First American reported 9.84 percent of area mortgages as underwater. Had the old method been used, the number jumps to 26.9 percent, up from the second-quarter’s 25.4 percent.
Check out the Wall Street Journal’s coverage of this topic here.
Comments
3 Responses to “Upside-down rate goes inside out”
The figures are meaningless unless you sell and don’t take into account wether you accessed a home equity loan which took profits off the table.
They were talking about “bailing” them out too when there wasn’t a real loss or reason to do it.
If the house was affordable before it is still afforadable.
It not afforable if you don’t have a job.
Over apparisals is what led to alot of
today’s financial problems. Time will tell
how many can stay in their present homes.
To many if they feel like their current
mortgage is much higher than it will sell
for in the distant future, they like
others parts of the country will just
walk away.
I’m surprised it’s this low. Everyone I know who owns (including myself) is way underwater.
However, everyone I know owns a condo (and I don’t mean these new ultra-expensive ones, I mean like townhome suburban units). Maybe houses are doing better.