Underwater Homes Gasp a Little Air

Underwater mortgages are the bugaboo of troubled homeowners. The more underwater their homes are -- in other words, the more negative equity they hold in their homes -- the better the chances are that homeowners will lose them. Therefore it should come as good news that only 10.8 million homes, or 22.5 percent of all residential properties, held negative equity at the end of the third quarter of 2010, according to First American CoreLogic.

Only? you say. Well, that is down from the 11.0 million, or 23 percent, of homes that were in negative equity at the end of the second quarter of 2010. Hardly a reason for celebration.

More bad news: The improved numbers are due mainly to an increase in foreclosures than an increase in home prices.

Still, the number of underwater homeowners has declined by 500,000 this year so far. Of course, that number may increase, if home prices continue to drop. Keep swimming, borrowers, and try not to drown!

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