While negative equity still continues to hinder the housing market's recovery, ""CoreLogic"":http://www.corelogic.com reported Thursday that the share of underwater mortgages declined.
[IMAGE]In the first quarter of 2012, the total number of underwater homes was 11.4 million, accounting for 23.7 percent of all residential properties with a mortgage. In the fourth quarter of 2011, 12.1 million properties, or 25.2 percent, were underwater. A year ago during the first quarter, 11.5 million homes were underwater, and the share of properties with negative equity was 24.7 percent.
""Although it will still be a slow recovery for U.S. homeowners, we see this improvement as a stabilizing and positive development for the mortgage industry,"" said Anand Nallathambi, president and CEO of CoreLogic.
An additional 2.3 million borrowers were categorized as having near-negative equity because they had less than 5 percent equity in their homes.
Together, negative equity and near-negative equity mortgages accounted for 28.5 percent of all residential properties with a mortgage in the first quarter, down from 30.1 percent in previous quarter.
In addition, more than 700,000 households saw their negative equity move into the positive territory in the first quarter of this year.
[COLUMN_BREAK]In terms of dollars, the amount of negative equity that exists decreased to $691 billion in the first quarter from $742 billion in the fourth quarter of 2011. This $51 billion drop is largely due to improvements in home prices, according to CoreLogic.
""In the first quarter of 2012, rebounding home prices, a healthier balance of real estate supply and demand, and a slowing share of distressed sales activity helped to reduce the negative equity share,"" said Mark Fleming, chief economist for CoreLogic. ""This is a meaningful improvement that is driven by quickly improving outlooks in some of the hardest hit markets. While the overall stagnating economic recovery will likely slow housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk.""
Nevada ranked first for having the highest share of negative equity with 61 percent of all mortgages in the state considered to be underwater. Second was Florida (45 percent), followed by Arizona (43 percent), Georgia (37 percent), and Michigan (35 percent). The average percent of negative equity when combining the five states is 44.5 percent compared to 15.9 percent for the remaining states.
States with the lowest negative equity share, such as Alaska (5.6 percent), North Dakota (5.8 percent), and New York (7.8 percent) â€" stayed under 10 percent.
The report noted the bulk of negative equity is concentrated in the low end of the market, with low-to-mid value homes valued at less than $200,000 holding 31 percent of the share of negative equity. For homes valued greater than $200,000, the share is 31 percent.
The report also stated that changing the HARP program by removing the 125 percent LTV cap allowed for more than 22 million borrowers to be eligible for HARP 2.0 when considering LTV alone. Prior to the change, which took effect in March 2012, those with LTVs higher than 125 percent were not eligible for refinancing.
Data from CoreLogic includes 48 million properties with a mortgage, which accounts for over 85 percent of all mortgages in the U.S.