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Underwater homeowners gain more company

While an economic recession is not yet official in 2023, consumers are struggling to keep up with everyday expenses — including housing payments.

3.0% of U.S. mortgaged loans were 30 or more days delinquent as of November 2022, up from the recent bottom of 2.75% in May 2022, according to Black Knight.

Here in California, 1.9% of mortgages are in some stage of delinquency as of November 2022. The share of delinquent mortgages has crept higher since bottoming at 1.7% in May 2022 — the same month that home prices peaked here in the state.

Underwater homeowners, owing more on their mortgage than their home’s current fair market value (FMV), are more likely to be delinquent on their mortgages than those in a positive equity position.

Nationally, 5% of mortgages originated in 2022 are underwater as of September 2022, and an additional 19% of mortgages originated in 2022 have less than 10% equity. The majority of these no- and low-equity mortgages are Federal Housing Administration (FHA)-insured and U.S. Department of Veterans Affairs (VA)-guaranteed loans, which have little to no down payment requirements.