Roughly 22.1% of all residential properties – 10.7 million units — encumbered by a mortgage were in a negative equity position at the end of September, a slight decline from mid-year, according to new figures compiled by CoreLogic, Santa Ana, Calif.

The analytics firm noted that an additional 2.4 million borrowers had less than 5% equity at the end of 3Q11, a category it calls “near negative equity.”

There are nearly 22 million borrowers (45% of all mortgagors) that have loans with an 80% or more LTV ratio. Almost 70% of these have above-market interest rates of 5% or more.

According to figures compiled by ASR sister publication National Mortgage News and the Quarterly Data Report, consumers owe roughly $9.3 trillion on their homes.

“Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness,” said CoreLogic chief economist Mark Fleming.

Nevada has the highest negative equity percentage (58%), followed by Arizona (47%), Florida (44%), Michigan (35%), and Georgia (30%). CoreLogic noted that this is the first quarter that Georgia entered the top five, surpassing California which had been in the top five since tracking began in 2009.

“Of the total $699 billion in aggregate negative equity, first liens without home equity loans account for $329 billion aggregate negative equity, while first liens with home equity loans account for $370 billion,” the firm writes in a new report. CoreLogic estimates that of the $370 billion first liens with home equity loans, $190 billion is due to the first lien component.

There are 8.6 million conventional loans in a negative equity position that have an average mortgage balance of $272,000 and are underwater by about $70,000.

There are 1.5 million FHA loans in a negative equity position that have an average mortgage balance of $170,000 and are underwater by an average of roughly $26,000, the firm says.
Given that bank portfolios account for 15% of all first lien mortgage loans, CoreLogic estimates that 1.6 million properties valued at $105 billion of aggregate negative equity are in bank portfolios.

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