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One fourth of local home borrowers under water: report

Topic: Mortgage

A quarter of Chicago-area homeowners with mortgages owe more on the loan than their property is worth, as local home prices continue to fall.

At the end of the fourth quarter, 385,780, or 25.4%, of the area’s 1.5 million homeowners with mortgages had negative equity, according to a report released Tuesday by CoreLogic, a Santa Ana, Calif.-based housing-data firm.

An additional 80,048, or 5.3%, had less than 5% equity, or what’s known as “near negative equity,” the report said.

The number of local negative and near negative equity homeowners increased compared to the third quarter, when 342,741, or 22.2%, of the area’s mortgages had negative equity and 77,414, or 5%, had near negative equity.

Falling home prices are the main culprit, trapping borrowers in their homes, unable to move out or sell unless they write a check to their lender or work out a so-called short sale. The Standard & Poor's/Case-Shiller index of Chicago-area single-family home prices declined for the fourth straight month in December, hitting its lowest level in nearly nine years.

“Until the high level of negative equity begins to recede, the housing and mortgage finance markets will remain very sluggish,” CoreLogic Chief Economist Mark Fleming said in a news release.

In Illinois, 440,258 or 19.7%, of the 2.23 million homeowners with mortgages had negative equity and 110,570, or 5%, had near negative equity in the fourth quarter.

Nationally, 11.1 million, or 23.1 %, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter, vs. 10.8 million, or 22.5%, in the third quarter, CoreLogic said.

03/08/2011

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