More than 8.3 million U.S. mortgages or 20 percent of all mortgaged properties were in a negative equity position at year-end 2008, according to data released by First American CoreLogic Wednesday. This is compared to the 7.6 million or 18 percent of borrowers who were underwater at the end of the third quarter.

And unfortunately, "the accelerating share of negative equity, combined with deteriorating economic conditions, means that mortgage risk will continue to increase until home prices and the economy begin to stabilize," said Mark Fleming, chief economist of First American CoreLogic, in a news release. "The worrisome issue is not just the severity of negative equity in the 'sand' states, but the geographic broadening of negative equity that is expected to occur throughout the year."

During the fourth quarter of 2008, an average of 230,000 borrowers a month slid into negative equity, according to the report.  California led the way with a whopping monthly average of 43,000 new negative equity borrowers, followed by Texas with 16,000, Nevada with 15,000 and Florida with 14,000.

Not to mention, there are an additional 2.2 million mortgaged properties that are approaching negative equity -- mortgages within 5 percent of being in negative equity territory -- said First American CoreLogic.  Negative equity and near negative equity mortgages combined, now account for 25 percent of all residential properties with a mortgage nationwide.

The distribution of negative equity is heavily skewed, however, to a small number of states. Nevada has the highest percentage of negative equity: more than half of all mortgage borrowers in that state are now “upside down." The average loan-to-value ratio for properties with a mortgage in Nevada was 97 percent or less than $8,000 in equity: leaving the typical mortgaged homeowner with virtually no cushion for the rapidly declining home values, explained the report.

Michigan was ranked second in the nation with a negative equity share of 40 percent, which is double the national negative equity share. Arizona, Florida and California weren't far behind.

Over 2.2 million or 5.3 percent of all mortgaged properties were in severe negative equity in December with LTVs of more than 125 percent. More than 70 percent of these mortgages were in the five states with the highest percentage of Negative equity. Interestingly, If the top five ranked states are excluded, the negative equity share for the remaining states sat at just 13.9 percent.

Write to Kelly Curran at kelly.curran@housingwire.com.