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BUSINESS

Pool of underwater home mortgages shrinks 40%

Julie Schmit
USA TODAY
A home is advertised for sale in Matthews, N.C.  Private data provider CoreLogic reports rising home values have reduced the number of homes with underwater mortgages reports by 40% from a year ago.
  • Home prices lift more homeowners into positive equity on home loans
  • Negative equity will decline if home prices continue to rebound%2C economist says

Rising home prices helped lift 4.2 million U.S. homeowners out of underwater territory on their home loans in the past year, market researcher CoreLogic reports.

As of the third quarter, 6.4 million homeowners with a mortgage still owed more on their homes than they were worth. That's down almost 40% from 10.6 million a year earlier.

CoreLogic data shows almost 13% of homeowners with a mortgage still in negative equity territory.

Negative equity will decline even further in the coming quarters as the housing market continues to improve, says Mark Fleming, CoreLogic chief economist.

Home prices in October were up 12.5% from a year earlier, CoreLogic says. Many economists forecast smaller home price gains ahead for next year.

In the third quarter, Nevada had the highest percentage of mortgaged properties in negative equity at 32.2%, followed by Florida, 28.8%, Arizona, 22.5%, Ohio, 18% and Georgia, 17.8%.

Of the largest 25 metropolitan areas, the Orlando area had the highest percentage of mortgaged properties in negative equity at 32.3%. It was followed by Tampa-St. Petersburg at 30.1% and the Phoenix region at 23.2%, CoreLogic's data shows.

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