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The MReport Webcast: Friday 12/19/2014

The number of U.S. homeowners who owe more on their mortgage than their home is worth has fallen off by nearly half in the last two years, but third-quarter data shows millions are still close to slipping back under. In a report released this week, property data firm Zillow estimated that 8.7 million homeowners living in the nation's top housing markets were underwater on their mortgage as of the end of the third quarter, putting the country's negative equity rate at 16.9 percent. The U.S. underwater rate peaked at 31.4 percent in the first quarter of 2012.

While improving trends in home values and foreclosures have helped push more homeowners into positive equity positions, many are still barely afloat, possessing too little equity to afford the cost of selling their home and buying a new one. Factoring in that group, Zillow estimates the effective negative equity rate is closer to 35 percent. Because they're essentially locked into their houses, those homeowners are unable to contribute to their local stock of for-sale homes and are stuck in the way of entry-level or move-up buyers.                                                       

Refinance volumes gained mortgage market share for a fourth straight month in November as interest rates continued to trend downward. Out of a sample of closed loans drawn from Ellie Mae's origination platform last month, 45 percent were refinances, the company reported Wednesday. November's refinance share marked a 5 percentage point increase from October and was the same as a year ago. Since bottoming out at 32 percent in July, the refinance slice of the market has steadily grown bigger in the past few months, owing to a continued drop in mortgage rates to their lowest levels in more than a year.

About Author: Jordan Funderburk

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