While the nation’s negative equity situation remains one of overall improvement, negative equity distribution varies considerably depending upon geographical location and home values within a given market, the latest Mortgage Monitor Report from Black Knight Financial Services said.

According to the report, the share of Americans underwater on their mortgages has declined to just over 4 million (or 8% of borrowers), with nearly 30% fewer underwater borrowers than last year.

 “We also observed that 29% of underwater borrowers are seriously delinquent on their mortgages and that borrowers in negative equity positions make up 77% of all active foreclosures. In fact, one of every three borrowers in active foreclosure has a current loan-to-value ratio of 150 or more, meaning they owe 50% more than their homes are worth,” said Ben Graboske, senior vice president with Black Knight Data and Analytics.  

“We drilled down to take a closer look at how this was playing out geographically and among different property price tiers. Nevada and Florida continue to see the nation’s highest negative equity rates, with 16.4% and 15.1% of borrowers being underwater in those states, respectively,” said Graboske.

In terms of price tiers, the report found that the bottom 20% of homes by price continue to struggle with negative equity, while negative equity rates on high-end homes – the top 20% by price – are limited, even in the hardest-hit states.

And when reviewing at the state level, borrowers in the bottom 20% of homes by price are nine times more likely to be underwater on their mortgages than those in the top 20%.

In addition, while seasonal decreases in the mortgage delinquency rate in March are typical, the 12.2% drop seen this year was the largest monthly decline in nine years. Declines were seen across all stages of delinquency (30, 60, 90 and 120+ days), with 30-day delinquencies hitting their lowest level in over 10 years. 

3d rendering of a row of luxury townhouses along a street

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