The housing pain continues

U.S. ‘Underwater’ Homeowners Increase to 28.6%, Zillow Reports - Businessweek: "The number of U.S. homeowners who owe more than their properties are worth climbed in the third quarter as lenders repossessed fewer houses, Zillow Inc. said.

The share of borrowers with negative equity rose to 28.6 percent, up from 26.8 percent in the second quarter and 23.2 percent a year earlier, the real estate data provider said today. Last quarter’s portion was the biggest since Seattle- based Zillow began tracking the measure in the first quarter of 2009, when 22.3 percent of households were underwater.

The number increased because fewer delinquent properties are being taken over by banks, said Stan Humphries, Zillow’s chief economist. Banks have slowed the pace of seizures as they negotiate with state attorneys general probing the mishandling of foreclosure documents.

“We still have very high negative equity rates,” Humphries said in an e-mail. “That’s putting extreme pressure on households because temporary job losses translate into foreclosures at much higher rates when the household is in negative equity.”"

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