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Originally published Friday, June 10, 2011 at 10:01 PM

Fewer homeowners are underwater on mortgages

Los Angeles Times

quotes The adjustable rate mortgage that I had before had me nearly to the brink of bankruptcy... Read more

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The number of homeowners underwater on their mortgages in the United States declined slightly during the first three months of the year.

The decline in the number of borrowers owing more on their mortgages than those properties are worth occurred despite falling home prices, which plunge borrowers underwater.

Those price declines are being offset by a pickup in foreclosure sales, which take underwater homes off the market, said Sam Khater, an economist with research firm CoreLogic of Santa Ana, Calif., which released the data Tuesday.

"We are treading water," Khater said.

The data showed that 10.9 million homes with a mortgage, or 22.7 percent of such properties, were underwater at the end of the first quarter. That was a slight decline from 11.1 million, or 23.1 percent, in the fourth quarter.

Nevada had the most mortgaged homes underwater, 63 percent, followed by Arizona, 50 percent; Florida, 46 percent; Michigan, 36 percent; and California, 31 percent.

Las Vegas led the nation with a 66 percent negative equity share, followed by Stockton, Calif., 56 percent; Phoenix, 55 percent; Modesto, Calif., 55 percent; and Reno, Nev., 54 percent. A report by the Los Angeles Times last week found that in some parts of the Las Vegas metro area more than 80 percent of homes were underwater, severely limiting mobility and economic opportunity in the region.

Home-equity loans also are contributing to the negative-equity problem, CoreLogic said. Thirty-eight percent of borrowers with second mortgages were underwater, compared with 18 percent of borrowers without home-equity loans.

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