A whopping 11.1 million homeowners were underwater on their mortgages in the fourth quarter, according to a report released today by CoreLogic.
The company said 23.1 percent of all residential properties with a mortgage were in a negative equity position, meaning they owed more on their mortgage(s) than the property was currently worth.
That’s up from 10.8 million, or 22.5 percent a quarter earlier, which the company attributed to recent home price declines.
Another 2.4 million borrowers had less than five percent home equity, meaning they too would have difficulty selling their homes without taking some kind of loss, thanks to real estate agent commissions and so forth.
Altogether, negative equity and near-negative equity homeowners accounted for 27.9 percent of all residential properties with a mortgage.
Nearly Two-Thirds of Nevada Homeowners Underwater
In hard-hit Nevada, a staggering 65 percent of all mortgaged properties were underwater, followed by Arizona (51%), Florida (47%), Michigan (36%) and California (32%).
Nevada also had the highest average loan-to-value ratio (LTV) at 118 percent, followed by Arizona at 95 percent and Florida at 91 percent.
New York state had the lowest average LTV, at 50 percent, followed by Hawaii at 54 percent and DC at 58 percent.
CoreLogic noted that home prices are expected to fall another five to 10 percent in 2011, which should push negative equity up another 10 percent, all other things being equal.
The company also noted that the new risk retention rule that could require borrowers to put down 20 percent on their mortgages (to get the best deal) will be hard on repeat buyers, as they historically rely on their existing equity for down payment.