Having negative equity means a borrowerrnowes more on a home mortgage than the home is worth because of a decline inrnhome value, an increase in mortgage debt, or both.  These borrowers are often referred to as “upsiderndown” or “underwater.” </p

The national aggregate value ofrnnegative equity was $337.4 billion at the end of Q1 2015, falling approximatelyrn$11.7 billion from $349.1 billion in Q4 2014. On a year-over-year basis, thernvalue of negative equity declined overall from $388 billion in Q1 2014,rnrepresenting a decrease of 13 percent in 12 months. </p

As other negative equity studies (Zillow,rnBlack Knight Financial Services) have pointed out, there is a much higherrnincidence of negative equity at the lower end of the market.  CoreLogic says that 94 percent of homesrnvalued over $200,000 have equity while 85 percent of those under that value dornnot.</p

In addition to the homes with negativernequity there are an estimated 9.7 million or 19.4 percent of mortgaged homes thatrnare what CoreLogic calls “under-equitied,” or having less than 20 percent equity,rnand 1.3 million of those have near-negative equity, less than 5 percent.  These homeowners may have a more difficultrntime refinancing existing homes or selling and buying anew because of the lackrnof a downpayment. On the lower end of this under-equitied group there is a riskrnof moving into negative territory if home prices fall.</p

“The CoreLogic Home Price Indexrnfor the U.S. was up 2.5 percent during the first quarter of 2015, which hasrnimproved the equity position of homeowners,” said Frank Nothaft, chief economistrnfor CoreLogic. “About 90 percent of homeowners now have housing equityrnand, as a result, have experienced an increase in wealth, which can spurrnadditional consumption and investment expenditures. The remaining 10 percent ofrnowners with negative equity will find their home value rising while theyrncontinue to pay down principal on their amortizing mortgage loan.” </p

“Many homeowners are emerging fromrnthe negative equity trap, which bodes well for a continued recovery in thernhousing market,” said Anand Nallathambi, president and CEO of CoreLogic.rn”With the economy improving and homeowners building equity, albeit slowly,rnthe potential exists for an increase in housing stock available for sale, whichrnwould ease the current imbalance in supply and demand. There are still about 5rnmillion homeowners who are underwater and we estimate that a further 5 percentrnappreciation in home values across the U.S. would reduce the number of ownersrnwith negative equity by about one million.”</p

The highest percentage of negativernequity is in Nevada at 23.1 percent followed by Florida (21.2 percent),rnIllinois (16.8 percent), Arizona (16.8 percent) and Rhode Island (15.7rnpercent). These five states together accounted for 31.4 percent of negativernequity in the U.S. </p

Of the total $337 billion in negativernequity, first liens without home equity loans accounted for over half at $181rnbillion, or 53 percent, in aggregate negative equity, while first liens withrnhome equity loans accounted for $157 billion, or 47 percent.  The 3.1 million underwater borrowers withrnonly one lien had an average mortgage balance of $229,000 and were underwaterrnby $58,000.  The 2 million with bothrnfirst and second liens owned a combined balance of $295,000 and had $78,000 inrnnegative equity.

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