Because of declining home prices at the end of last year, nearly 25% of mortgage holders in the U.S. found themselves with a home that was worth less than their home loan.

 

According to CoreLogic, the rate of underwater mortgages was 23.1% at the conclusion of 2010, representing 11.1 million homeowners. Another 5%, or 2.4 million borrowers, had “near negative equity” mortgages. If housing prices decline this year another 5-10%, as some experts predict, the nation could find itself with one-third of all mortgages underwater.

 

Things are even worse in some parts of the country. In Nevada, about two-thirds of homeowners have a mortgage with negative home equity, followed by Arizona, Florida, Michigan and California, where the rate is around 50% of mortgage holders. In Las Vegas, 69.1% of homeowners have negative equity and in Phoenix, Arizona, the rate is 56.5%.

 

In total, residential properties in the United States covered by mortgages are worth about $12.5 trillion, of which $3.7 trillion is equity and $8.8 trillion is debt.

-Noel Brinkerhoff

 

Struggling Homeowners $751 Billion Underwater in 4th Quarter (by Daniel Indiviglio, The Atlantic)

Underwater Mortgages Rise as Home Prices Fall (by Derek Kravitz, Associated Press)

The 15 Cities with the Most Underwater Mortgages (by Gus Lubin and Thornton McEnery, Business Insider)