Magazine article Mortgage Banking

Nevada Has Highest Negative-Equity Share at 65 Percent

Magazine article Mortgage Banking

Nevada Has Highest Negative-Equity Share at 65 Percent

Article excerpt

In a new report released on March 8, CoreLogic, Santa Ana, California, found that 65 percent of the mortgage properties in Nevada were underwater. Arizona was next at 51 percent, followed by Florida (47 percent), Michigan (36 percent) and California (32 percent).

For the nation, the share of residential mortgages with negative equity reached 23.1 percent at the end of the fourth quarter of 2010. That number was up from 22.5 percent in the third quarter, according to CoreLogic.

Nevada also scores off the charts with its average loan-to-value (LTV) ratio for properties carrying a home mortgage, says CoreLogic. The average LTV in Nevada is 118 percent, meaning the average borrower has no equity in his or her home whatsoever. Other states with high average LTVs are: Arizona (95 percent), Florida (91 percent), Michigan (84 percent) and Georgia (81 percent).

The CoreLogic release announcing the fourth-quarter negative-equity numbers noted that the consensus is that home prices will fall another 5 percent to 10 percent in 2011. To identify states at particular risk for further defaults due to underwater mortgages, you need to identify local home-price trends as well. Rising prices can help boost borrowers on the brink of negative equity into positive equity territory and vice versa. …

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