Most of these homeowners can't refinance because they have negative equity or "underwater". This is a very large potential pool of homeowners that might just walk away from their house if home values continue to drop.
More than 2 million California homeowners owed more than their homes were worth at the end of the second quarter, more than in any other U.S. state, according to Santa Ana-based data firm CoreLogic.
While that’s due in part to the state’s large population, California still had the fifth-highest proportion of “underwater” mortgages: 30.2% of all homes with mortgages, CoreLogic reported.
The next highest number of underwater loans was in Florida, which had 1.97 million loans that exceeded a home’s value.
Nationwide, 10.9 million U.S. homeowners — or 22.5% of all owners with a home loan — were under water in Q2, CoreLogic reported.
Read it allAnd in a new study, CoreLogic found that a greater proportion of underwater homeowners are unable to refinance their loans to take advantage of historically low mortgage rates. CoreLogic Chief Economist Mark Fleming said: