One-quarter of Chicago mortgages underwater, report shows

The Chicago Local

Jess Wisloski, Yahoo! Local editor

One in every four Chicago homeowners owes more on his or her mortgage than the home is worth, according to a study reported on by the Chicago Tribune.

The report, compiled by California-based firm CoreLogic, looked at data representing 85 percent of the U.S.'s mortgages in the the second quarter of 2011.

The findings discovered that 387,500 residential mortgages in Chicago mortgages were underwater -- a term that is used to describe the phenomenon of owing more on a home that the current market value of a property (it's also called "negative equity").

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The rate at which Chicago owners find themselves underwater is only slightly higher than the second-quarter nationwide average of 22.5 percent for a total of 10.9 million homes.

According to the study 75 percent of those homes held higher-than-average interest rates and are possibly unable to refinance because more is owed on the loan than the house is worth.

Aside from those already in negative equity, an additional 79,000 local homes were nearly underwater, a with thee homeowner's equity in the property at 5 percent or less, the Tribune reported.

Mark Fleming, the chief economist for CoreLogic, noted in a statement that the high rate of negative equity was a roadblock to the housing market's recovery.

"The hardest-hit markets have improved over the last year, primarily as a result of foreclosures. But nationally, the level of mortgage debt remains high relative to home prices," he said.