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More in Tampa Bay seeking home equity credit lines as underwater mortgages fall

 
The number Tampa Bay homeowners who are underwater, owing more on their mortgage than their home is worth, has decreased from 48.4 percent in early 2012 to 22 percent this September.
The number Tampa Bay homeowners who are underwater, owing more on their mortgage than their home is worth, has decreased from 48.4 percent in early 2012 to 22 percent this September.
Published Dec. 18, 2014

The number of Tampa Bay homeowners who are under water on their mortgages has plunged, fueling a surge in applications for home equity loans.

In the three months ended in September, only 22 percent of bay area homes had negative equity, down from a peak of 48.4 percent in early 2012, according to the real estate database Zillow.

That keeps Tampa Bay in line with other major urban areas that have also seen a sharp drop in underwater homeownership.

"Negative equity will likely be a part of the housing market for years, and easily into the next decade, for some hard-hit areas,'' said Zillow chief economist Stan Humphries. "But we're moving in the right direction.''

In the bay area, people whose homes are worth more than the mortgaged amount are once again refinancing, or tapping their equity for money to make renovations, pay for college or just splurge.

At USAmeriBank, with 12 branches in Hillsborough and Pinellas counties, applications for home equity lines of credit have risen at least 20 to 25 percent.

"Those were almost non-existent two or three years ago,'' said Gilly Dominguez, a residential loan officer.

The jump has been even more dramatic at Suncoast Credit Union, which serves 17 counties on Florida's west coast.

"We have seen a very big increase in our closings on equity products from this time last year. I would say it's been an increase of over 400 percent,'' said Victoria Lovett, Suncoast's chief lending officer. "I think a lot of it has to do not only with the fact that there's an increase in equity, but I think consumers are more confident now in entering into additional debt than they were in the past.''

But homeowners should be wary of using their houses as piggy banks, cautions Bethany McLean, author of a book on the financial crisis. She notes that many of the subprime loans that ended in foreclosure were not mortgages used to buy houses but rather refinancings used to pull out cash.

"If we want homes to be a vehicle for saving and building wealth, as they used to be, why are we instead encouraging people to increase their indebtedness?" McLean wrote in a recent piece for the New York Times. "Even worse, we now know that too much credit results in people who once owned their homes losing them. It creates homelessness, not home ownership.''

Dominguez said tougher underwriting guidelines make it harder to refinance or get an equity line than it was seven or eight years ago. While a borrower might qualify for a 30-year regular mortgage, she might get only 10 or 15 years to pay off a home equity loan.

"We're going to make the payments higher to make it a little tougher to qualify,'' he said.

While many homeowners have escaped the negative equity trap, some pockets of Tampa Bay still have relatively high percentages of those under water. In Hillsborough's Palm River area, it's 42.3 percent; in Port Richey, 40.1 percent; and in Temple Terrace, 32.2 percent.

By comparison, homes along Pinellas beaches have been more apt to hold their values. Even at the peak of negative equity in early 2012, only 18.6 percent of Belleair homeowners were under water, compared with 31.4 percent nationwide.

Contact Susan Taylor Martin at smartin@tampabay.com or (727)-741-9089. Follow @susanskate