Fewer LI mortgages are under water

Homeowners in foreclosure and those at risk of Homeowners in foreclosure and those at risk of foreclosure can get information on loan modification programs and other assistance from 11 a.m. to 6 p.m. March 23 in Lindenhurst, according to the state Department of Financial Services. Photo Credit: iStock

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The number of borrowers who owe more on their mortgages than their homes are worth fell slightly on Long Island during the third quarter, a new report said.

But CoreLogic, which tracks mortgages, said there was an uptick in the numbers of homeowners in danger of losing all their home equity.

Data show 5.3 percent, or 28,796 homes on the Island, had negative equity, down from the second quarter's 5.4 percent, or 29,092 homes.

An additional 1.9 percent, or 10,211 homeowners, were potentially facing negative equity, which means they had less than 5 percent equity in their properties, the third quarter report said. That's slightly up from 10,074 homes in the preceding quarter, figures show.

Economists, mortgage experts and public officials have been concerned about negative equity. Homeowners with little or negative equity are more likely to default, they said. That adds to the inventory of pending foreclosures and drives home prices down, they said.

To real estate agent Gregory Berkowitz, negative equity has turned a Lattingtown home, last listed for $1.4 million, into a bargain. It has 12,000 square feet, which translates to almost $117 per square foot.

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"The home is the least expensive home on Long Island per square foot," said Berkowitz, regional sales director for Laffey Fine Homes in Syosset.

The owner is eager to get out of his $1.8 million mortgage with a "short sale," in which the lender takes less than owed if a buyer is found, he said.

But potential buyers tend to make unreasonable offers when they know the homeowner has no equity in the house, the sales director said.

"People think they're going to get a better deal," Berkowitz said. "Every time I deal with a home that's in foreclosure or a short sale, people smell the blood."

The Island's dip in negative equity rates dovetailed with the national picture, which showed 22.1 percent of homeowners were in negative equity during the third quarter, down from 22.5 percent in the preceding quarter, CoreLogic said.

Mark Fleming, CoreLogic's chief economist, said those rates are still high, and the problem holds back the recovery of the housing market and the broader economy: "Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness."

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