The number of homeowners in Memphis, Tennessee that will be entering the foreclosure process for the first time is likely to increase in the coming months, analysts have reported. Data from CoreLogic showed that the percentage of underwater mortgage loans in the region has risen as of the end of last year.
Foreclosure homes in Nashville and distressed houses in various areas of the state are already high and an increase in underwater loans can spark another increase, analysts have explained. They asserted that underwater mortgages or negative equity often leads to foreclosure since homeowners with these kinds of loans find it almost impossible to sell their houses; an option that they usually consider when they encounter troubles paying off their monthly mortgages. In addition, negative equity usually disqualifies homeowners from seeking refinancing.
Memphis homeowners with negative equity as of the end of last year who are in danger of losing their properties to foreclosure homes in Tennessee are estimated to be more than 26% of the total number of mortgaged residences in the metro area. The total count as of the latest figures released by CoreLogic was 57,917. Statewide, 13.8% of total mortgaged residential units have negative equity, while 7% are nearing the underwater level. In terms of actual numbers, 131,786 Tennessee homeowners are said to be underwater as of the last month of 2010.
For those who are nearing the first step of the foreclosure process or near the negative equity mark, the total was a little over 67,000 statewide. Figures showed that Memphis' underwater loan rate is higher than the average nationwide, although the statewide rate is lower compared with nationwide levels. For the whole U.S., over 11 million households are currently holding underwater mortgage loans.
This could present a huge problem for the country's housing market since some of these underwater loans are likely to add to the number of foreclosed houses in the coming months. Analysts have stated that the increase in the number of underwater borrowers in the country was largely due to the huge decline in housing prices during the latter part of 2010. Although Tennessee has its own problems with negative equity, they are not as massive as in other regions.
Statistics showed that the number of homeowners in danger of entering the foreclosure process soon was highest in Nevada, with the state having an underwater loan percentage of 65%. Arizona was second at 51%, with Florida coming in third with 47% of its mortgages already underwater.
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