A man holds a pen over mortgage application forms.
A man holds a pen over mortgage application forms. - 
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JEREMY HOBSON: Thirty-eight percent of homeowners who took out second mortgages on their houses are now underwater on their loans. In other words, the value of the mortgages is higher than the value of the house. Compare that 38 percent with 18 percent which is the figure for homeowners who are underwater and only have one mortgage. The statistics come this morning from CoreLogic, a real estate data company.

Mark Fleming is CoreLogic's chief economist and he joins us now. Good morning.

MARK FLEMING: Good morning.

HOBSON: Well, why do you think there are so many more second mortgages that have gone bad than primary mortgages?

FLEMING: Well, when borrowers use second mortgages to extract equity out of their homes, they put themselves at more risk by being more levered on their homes when house prices declined. So the incidents of negative equity or being underwater on your home is higher then if you'd extracted money through the form of home equity loans.

HOBSON: And what are the consequences for the people who are under water?

FLEMING: That's a very good question. Mostly, it reduced your mobility, or your ability to move. Obviously you can't refinance or sell your house if you run into a spot of trouble with your ability to pay. That puts you at increased risk of foreclosure. And it doesn't allow you to move optionally if you wanted to move into a new house or change jobs and move locations.

HOBSON: And I did see on the bright side according to your data that the overall percentage of people who are under water on their mortgages has dropped slightly from 23 percent late last year to 22.7 percent in the beginning of this year. Do you think that's good news?

FLEMING: Well, yes I do. I think any small decline at this point is good -- an indication that hopefully we've weathered the worst of the storm and things will begin to get better. So, I am happy to see that it's not conditioning to rise at least.

HOBSON: Mark Fleming, chief economist at CoreLogic, thanks so much for your time this morning.

FLEMING: Thank you very much.