A ground-breaking look at negative equity effects among U.S. homeowners, released Friday morning, paints a staggering picture of just how bruised the national housing market really is. The study, conducted by researchers at First American CoreLogic, paints a troubling picture estimating that 7.62 million borrowers in the U.S. are currently underwater on their mortgages — or 18.3 percent of all properties with a mortgage. There are an additional 2.1 million mortgages that are approaching negative equity, as well, defined as mortgages within 5 percent of being in a negative equity position. Negative-equity and near-negative equity mortgages combined account for over 23 percent of all properties with a mortgage, according to researchers at First American CoreLogic. Nearly half of all borrowers in Nevada are currently underwater on their mortgages, with an estimated 48 percent of properties with a mortgage upside-down on value. The state was among the most overheated during the recent housing bubble, and has been hit hard as prices struggle to correct. Michigan ranks second in the study, with an estimated 39 percent of mortgages now underwater. Five other states have negative equity shares in excess of 20 percent, according to the study: Florida (29%), Arizona (29%), California (27%), Georgia (23%), and Ohio (22%). Percentages aside, both California and Florida have by far the most underwater borrowers of any other states: an estimated 1.8 million loans are underwater in California, and another 1.2 million loans are estimated to be underwater in Florida. Previous numbers are tough to come by, but it is widely believed that never before have so many homeowners been a negative-equity position; and early data are indicating that borrowers facing negative equity positions are a significant risk of default. HousingWire’s recent analysis of performance data at FirstFed Financial Corp. (FED) found that more than 40 percent of borrower defaults on the bank’s loans involved borrowers estimated to be in a negative equity position. The top six states in terms of negative equity accounted for over 58 percent of all negative equity mortgages in the study, although they only account for 36 percent of all mortgages, driving the notion that much of the nation’s real estate pain is centered in a few key locations. In fact, excluding the top 6 states, the average negative equity in the remaining 44 states is 12 percent, well below the national average — but still a number large enough to matter on a national scale. Nobody should be surprised to see the boom-bust states leading the way, or Midwestern states facing economic stagnation also having problems. But what’s more telling than anything in the data is an emerging picture of troubled in Southern states that did not necessarily experience a housing boom: places like Texas, Georgia, Arkansas and Tennessee. In fact, comparing mortgages already underwater with those estimated to be nearing negative equity, Oklahoma, Alabama and North Carolina lead the way in terms of negative equity growth likely to be seen in coming months. The study excluded Maine, Mississippi, North Dakota, South Dakota, Vermont, West Virginia, and Wyoming due to a lack of sufficient real estate data. For more information, visit http://www.facorelogic.com. Write to Paul Jackson at [email protected].