Think you’re still underwater on your mortgage? Maybe not.
The percentage of homes in the Chicago area with a mortgage seriously underwater has fallen for four consecutive quarters, to 27 percent in the third quarter, from 41 percent a year earlier, according to data from RealtyTrac released Thursday. A mortgage is considered seriously underwater when the amount owed on the loan is at least 25 percent more than the property’s worth.
Another 16 percent of Chicago-area homes with mortgages are close to regaining equity, according to the company’s data.
Among homes in foreclosure, the percentage of seriously underwater mortgages also has declined, to 27 percent in the three months ended in September, compared with 73 percent at the end of 2013’s third quarter.
During the quarter, one-quarter of local homeowners in foreclosure had equity in their homes. But rising home prices and regained equity alone don’t save someone from foreclosure.
Earlier this year, Fitch Ratings estimated that the percentage of borrowers who had equity in their homes but still fell into foreclosure had almost doubled in the past two years, in part because of a long backlog of missed payments.
Nationally, the percentage of underwater mortgages was at its lowest level since RealtyTrac began tracking the data in early 2012.
In July, the S&P/Case-Shiller home price index for the Chicago area posted the fifth consecutive month of improvement, but like the rest of the country, the gains slowed. Seventeen of the 20 cities in the index, including Chicago, showed slimmer upticks in July than in June. The index for August will be released next week.
“Slower price appreciation means the 8 million homeowners seriously underwater could still have a long road back to positive equity,” said Daren Blomquist, a RealtyTrac vice president.
Twitter @mepodmolik