Home values have sunk further below mortgage balances in boom-bust states like California, Florida and Nevada, but the bigger worry now is places where prices have not yet fallen steeply, First American CoreLogic said.

The unit of First American Corp. of Santa Ana, Calif., said Wednesday that 8.3 million U.S. mortgages, or 20% of all properties with a first or second lien, were in a negative-equity position at Dec. 31.

Another 2.2 million mortgages were nearing the point of negative equity.

Unsurprisingly, Nevada had the highest percentage of negative-equity mortgages, at 55.1% at the end of last year. The figure was 32% in Arizona. In California and Florida, 30% of homeowners are underwater on their mortgages, the report found.

Mark Fleming, First American CoreLogic's chief economist, said his biggest concern is large Midwest and Southeast states including Ohio, Illinois and Georgia, which he said are "more sensitive" to home equity declines than in the past.

Many Sun Belt states "already have very high negative equity," so further declines in home prices there will result in "smaller negative-equity share increases relative to other states," Fleming said.

However, in at least one state homeowners' equity position has improved, according to First American CoreLogic's survey.

The share of New York loans that were underwater fell 2.3 percentage points from Sept. 30, to 4.3% at yearend. Fleming said the drop could be attributed to an increase in refinancings in the fourth quarter, which paid off mortgage balances, and to the fact that New York has not had significant price declines compared with other states.

The report came as President Obama's administration outlined details of its loan modification program that would subsidize principal and interest rate reductions aimed at lowering monthly mortgage payments to 31% of a borrower's income.

Fleming said more than 2.2 million, or 5.3% of all U.S. mortgages, are in a "severe negative-equity position," in which the loan-to-value ratio is 125% or more.

More than 70% of these mortgages are in five states: California, Florida, Nevada, Michigan and Arizona.

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