Those in ‘Negative Equity’ Nearly One-Third of All Homeowners

Homeowners who owe more on their mortgages than the value of their homes – referred to as negative equity – accounted for 27.8 percent of all residential properties nationwide in the fourth quarter, up from 27.1 in the previous quarter, according to CoreLogic, the analytics firm
Nationally, the total mortgage debt on properties in negative equity increased from $2.7 trillion in the third quarter to $2.8 trillion in the fourth quarter, reported CoreLogic.
The five states with the highest proportions of negative equity– Nevada, Arizona, Florida, Michigan and Georgia –have an average combined negative equity share of 44.3 percent, while the remaining states have a combined average negative equity share of 15.3 percent.
Of the 11.1 million “upside-down” borrowers, there are 6.7 million first liens without home equity loans. This group of borrowers has an average mortgage balance of $219,000 and is underwater by an average of $51,000, or a loan-to-value (LTV) ratio of 130 percent.
For all first-lien-only borrowers, negative equity share was 18 percent, while 41 percent of all first-lien-only borrowers had 80 percent LTV or higher.
The remaining 4.4 million “underwater” borrowers had both first and second liens. Their average mortgage balance was $306,000, and they were upside down by an average of $84,000, or a combined LTV of 138 percent.
The negative equity share for all first-lien borrowers with home equity loans was 39 percent, more than twice the share for all first-lien-only borrowers.
More than 60 percent of borrowers with first liens and home equity loans had combined LTVs of 80 percent or higher.
The slowing down of foreclosures – much of it due to a nationwide review of the improper “robo-signing” of paperwork – combined with falling home prices contributed to the increase in negative equity, CoreLogic said.
“The high level of negative equity and the inability to pay is the ‘double trigger’ of default, and the reason we have such a significant foreclosure pipeline,” CoreLogic said in a statement.
Nevada had the highest negative equity percentage, with 61 percent of all of its mortgaged properties underwater, followed by Arizona (48 percent), Florida (44 percent), Michigan (35 percent) and Georgia (33 percent).
This is the second consecutive quarter that Georgia was in the top five, surpassing California (30 percent), which previously had been in the top five since tracking of negative equity began in 2009.

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