The third-quarter addition, however, is just one fraction of the over 1.3 million borrowers that moved into positive equity through the second quarter of 2012 bringing the total number of borrowers who moved from negative equity to positive equity in September year-to-date to 1.4 million.
Driven mostly “by an improvement in house-price levels,” according to analysts, the story of borrowers who owe more on their mortgages than their homes are worth because of a decline in value, an increase in mortgage debt or both, is far from over.
CoreLogic data analysis show 10.7 million, or 22% of all residential properties with a mortgage, were in negative equity at the end of the third quarter of 2012—down from 10.8 million properties, or 22.3%, at the end of the second quarter of 2012.
The total number of both borrowers with negative equity and those with near-negative equity who had less than 5% equity in their home is even higher.
At the end of the third quarter an additional 2.3 million borrowers were in near-negative equity status.
Together, negative equity and near-negative equity mortgages accounted for 26.8% of all residential properties with a mortgage nationwide in the third quarter of 2012, down only 2 bps from 27% at the end of the second quarter in 2012.
In dollars nationally, negative equity decreased $31 billion from $689 billion at the end of the second quarter in 2012 to $658 billion at the end of the third quarter.
Chief economist for CoreLogic, Mark Fleming, attributed part of last year’s “substantive gain” in house prices “to tight inventory caused by negative equity's lock-out effect,” that paradoxically alleviated some of the pain, but warned that “with nearly one-quarter of borrowers still underwater, we have a long way to go."
Nonetheless, expectations for 2013 are to “continue to see more borrowers escape the negative equity trap.”