Nearly Half of AZ Mortgages Are Underwater

Close to half of all homes with mortgages in Arizona were upside down in the third quarter, CoreLogic reported Tuesday. In Arizona, 47.1 percent, or 617,876 residential properties with a mortgage had negative equity in the third quarter, according to CoreLogic. Nevada, at 58.3 percent, was the only state with a higher negative equity rate than Arizona.

Negative equity, often referred to as “underwater” or “upside down,” means borrowers owe more on their mortgages than their homes are worth. Nationally, 22.1 percent, or 10.7 million, of all residential properties with a mortgage were underwater at the end of the third quarter. This was down a bit from 22.5 percent, or 10.9 million properties, in the second quarter. "Negative equity remains very high, and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness," said Mark Fleming, chief economist with CoreLogic. "The nearly $700 billion mortgage debt overhang has touched many corners of the market, and this overhang is holding back the recovery of the housing market and broader economy.”

Consequently, we believe the current pace of short sales and foreclosures will continue through 2012. No quick fix is on the way.