- Dennis Norman
According to a report issued by First American CoreLogic more than 15.2 million U.S. mortgages,or 32.2 percent of all mortgaged properties,are in a negative equity position meaning the borrowers owe more on their mortgage than their home is worth.
Much like foreclosures,the distribution of negative equity mortgages is heavily skewed to a small number of states as three states account for roughly half of all mortgage borrowers in a negative equity position. Nevada (66 percent) had the highest percentage with nearly two-thirds of mortgage borrowers in a negative equity position. Next highest is Arizona (51 percent) and Florida (49 percent) followed by Michigan (48 percent) and California (42 percent). ”Negative equity continues to be the dominant driver of the mortgage market because it leads to foreclosures in the event a borrower experiences some kind of economic shock such as a job loss,illness or other adverse situation. Given that negative equity did not increase this quarter and home prices declines are moderating or flattening,we may be at the peak of the negative equity cycle. However,until negative equity recedes and unemployment declines,mortgage risk will continue to be very elevated,”said Mark Fleming,chief economist for First American CoreLogic.
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