Zillow.com, a popular real estate website, has reported that 21.5 percent of borrowers with a mortgage loan owe more than their homes are worth. However, this high number of underwater mortgages is still lower than what was found in the previous quarter, when 23.3 percent of loans had an underwater status.
Since an underwater mortgage is a prime predictor of foreclosure, this number is closely watched. Unfortunately, in this case, the reason that the number of underwater mortgages have dropped is mostly due to homeowners already having lost their homes to foreclosure. However, in some markets, residents have been helped by dropping home prices which have narrowed the gap between what they owe and how much the home is worth (CNN Money).
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