Fewer Homes "Underwater" as Foreclosures Increase

Trade-industry data released on Monday showed that the number of U.S. homeowners who owe more on their mortgages than their homes are worth fell in the third quarter, but the decline stemmed from banks getting more aggressive on foreclosures, not from home values going up, the Wall Street Journal reported today. The total of underwater mortgages fell to 10.8 million at the end of September, down from a peak of 11.3 million at the beginning of the year, according to CoreLogic, a real-estate data firm. The latest total accounts for nearly 22.5 percent of U.S. homeowners with a mortgage. Home prices, meanwhile, appear to be declining again after tax credits that spurred sales produced modest price gains during the first half of the year. Home values could drop by an estimated $1.7 trillion this year, a 40 percent increase from a year ago, according to Zillow.com, a real-estate website. Most of the decline is expected in the second half of the year.