More than 30% of mortgage borrowers still underwater

NEW YORK (CNNMoney) — Despite rising home prices, more than 30% of borrowers, or close to 16 million homeowners, were underwater on their mortgage during the first quarter, according to Zillow.

The percentage of borrowers who owed more on their home than it was worth increased to 31.4% during the quarter, up slightly from 31.1% three months earlier, according to Zillow. In the year-ago period, 32.4% of all borrowers had negative equity on their loan.

The uptick in underwater homeowners occurred even though home prices have slowly started recovering. On Wednesday, the Federal Housing Finance Agency reported that national home prices rose a modest 0.6% during the first quarter, the first price gain since 2007.

Nevertheless, the percentages of homeowners who were underwater on their homes remained high as delays in the processing of foreclosures kept many delinquent borrowers on the balance sheets, said Zillow. Once a bank repossesses a home, the mortgage holder’s negative equity is no longer considered part of the tally.

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