CoreLogic® Reports Negative Equity Increase in Q4 2011

--Negative Equity Back to Q3 2009 Housing Market Trough Level--

(PRNewswire) —  CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services, today released negative equity data showing that 11.1 million, or 22.8 percent, of all residential properties with a mortgage were in negative equity at the end of the fourth quarter of 2011. This is up from 10.7 million properties, 22.1 percent, in the third quarter of 2011. An additional 2.5 million borrowers had less than five percent equity, referred to as near-negative equity, in the fourth quarter. Together, negative equity and near-negative equity mortgages accounted for 27.8 percent of all residential properties with a mortgage nationwide in the fourth quarter, up from 27.1 in the previous quarter. Nationally, the total mortgage debt outstanding on properties in negative equity increased from $2.7 trillion in the third quarter to $2.8 trillion in the fourth quarter.

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Negative equity, often referred to as "underwater" or "upside down," means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

"Due to the seasonal declines in home prices and slowing foreclosure pipeline which is depressing home prices, the negative equity share rose in late 2011. The negative equity share is back to the same level as Q3 2009, which is when we began reporting negative equity using this methodology. The high level of negative equity and the inability to pay is the 'double trigger' of default, and the reason we have such a significant foreclosure pipeline. While the economic recovery will reduce the propensity of the inability to pay trigger, negative equity will take an extended period of time to improve, and if there is a hiccup in the economic recovery, it could mean a rise in foreclosures." said Mark Fleming, chief economist with CoreLogic.

Highlights as of Q4 2011

  • Nevada had the highest negative equity percentage with 61 percent of all of its mortgaged properties underwater, followed by Arizona (48 percent), Florida (44 percent), Michigan (35 percent) and Georgia (33 percent). This is the second consecutive quarter that Georgia was in the top five, surpassing California (30 percent) which previously had been in the top five since tracking began in 2009. The top five states combined have an average negative equity share of 44.3 percent, while the remaining states have a combined average negative equity share of 15.3 percent.
  • Of the 11.1 million upside-down borrowers, there are 6.7 million first liens without home equity loans. This group of borrowers has an average mortgage balance of $219,000 and is underwater by an average of $51,000 or an LTV ratio of 130 percent. For all first-lien-only borrowers negative equity share was 18 percent, while 41 percent of all first-lien-only borrowers had 80 percent LTV or higher.
  • The remaining 4.4 million upside-down borrowers had both first and second liens. Their average mortgage balance was $306,000 and they were upside down by an average of $84,000 or a combined LTV of 138 percent. The negative equity share for all first-lien borrowers with home equity loans was 39 percent, more than twice the share for all first-lien-only borrowers. Over 60 percent of borrowers with first liens and home equity loans had combined LTVs of 80 percent or higher.
  • Nearly 18 million borrowers were between 80 percent and 125 percent LTV and, purely from an LTV perspective, eligible for HARP 1.0. The removal of the 125 percent LTV cap via HARP 2.0 means that over 22 million borrowers are currently eligible for HARP 2.0 when just considering LTV alone.
  • The low end of the market is where the bulk of the negative equity is concentrated. For example, for low-to-mid value homes valued at less than $200,000, the negative equity share is 54 percent for borrowers with home equity loans, over twice the 26 percent for borrowers without home equity loans.
  • Of the total $717 billion in aggregate negative equity, first liens without home equity loans accounted for $342 billion aggregate negative equity, while first liens with home equity loans accounted for $375 billion. Over $230 billion in negative equity is from homes valued at $200,000 or less.
  • There were 8.8 million negative-equity conventional loans with an average balance of $269,000 that are underwater by an average of $70,000. There were 1.7 million underwater FHA loans with an average balance of $169,000 that are underwater by an average of $26,000.

Figure 1 - Negative Equity Concentrated Mostly in Sand States
Q4 2011 Negative Equity Share

Figure 2 - Distribution of Equity Widely Varies by State
Q4 2011 Equity Distribution

Figure 3 – National Distribution of Home Equity
Negative Equity Share by LTV Segment

 

Q4 2011 Negative Equity by State*

 

Properties With a Mortgage Outstanding

$ Outstanding

STATE

Mortgages

Negative Equity Mortgages

Near** Negative Equity Mortgages

Negative Equity Share

Near** Negative Equity Share

Total Property Value

Mortgage Debt Outstanding

Net Homeowner Equity

Loan-to-Value Ratio

Alabama  

364,248

43,431

20,768

11.9%

5.7%

67,988,332,455

46,752,730,556

21,235,601,899

68.8%

Alaska  

90,567

6,273

4,430

6.9%

4.9%

25,176,580,527

16,632,502,479

8,544,078,048

66.1%

Arizona  

1,305,568

631,126

62,058

48.3%

4.8%

243,016,034,212

226,221,396,428

16,794,637,784

93.1%

Arkansas  

256,969

25,676

15,700

10.0%

6.1%

41,365,736,687

29,805,038,062

11,560,698,625

72.1%

California  

6,829,717

2,041,276

319,689

29.9%

4.7%

2,732,861,358,945

1,944,760,702,362

788,100,656,583

71.2%

Colorado  

1,152,374

241,682

88,743

21.0%

7.7%

306,127,142,715

222,393,545,856

83,733,596,859

72.6%

Connecticut  

826,432

111,140

30,241

13.4%

3.7%

289,451,482,228

175,463,860,409

113,987,621,819

60.6%

Delaware  

183,102

28,919

9,194

15.8%

5.0%

47,463,035,080

32,135,146,423

15,327,888,657

67.7%

Florida  

4,334,505

1,916,082

179,460

44.2%

4.1%

809,952,858,685

706,002,385,383

103,950,473,302

87.2%

Georgia  

1,638,192

541,178

113,203

33.0%

6.9%

306,591,874,060

252,811,201,929

53,780,672,131

82.5%

Hawaii  

229,896

24,118

7,475

10.5%

3.3%

120,572,128,938

65,280,681,775

55,291,447,163

54.1%

Idaho  

256,883

64,135

13,048

25.0%

5.1%

49,763,728,593

36,583,897,280

13,179,831,313

73.5%

Illinois  

2,251,574

489,535

113,014

21.7%

5.0%

516,811,605,754

374,453,936,248

142,357,669,506

72.5%

Indiana  

647,323

69,123

28,678

10.7%

4.4%

98,602,579,934

68,418,043,844

30,184,536,090

69.4%

Iowa  

386,901

38,125

17,232

9.9%

4.5%

58,446,934,143

39,813,149,961

18,633,784,182

68.1%

Kansas  

304,308

32,552

15,420

10.7%

5.1%

54,742,049,444

38,438,564,957

16,303,484,487

70.2%

Kentucky  

297,094

26,704

14,369

9.0%

4.8%

50,507,165,569

34,428,321,507

16,078,844,062

68.2%

Louisiana  

NA

NA

NA

NA

NA

NA

NA

NA

NA

Maine  

NA

NA

NA

NA

NA

NA

NA

NA

NA

Maryland  

1,360,309

331,159

68,794

24.3%

5.1%

418,341,440,343

296,809,808,807

121,531,631,536

70.9%

Massachusetts  

1,495,198

240,887

53,084

16.1%

3.6%

534,954,658,827

335,421,133,073

199,533,525,754

62.7%

Michigan  

1,383,586

480,075

72,582

34.7%

5.2%

198,048,338,982

165,454,528,539

32,593,810,443

83.5%

Minnesota  

594,535

109,407

33,134

18.4%

5.6%

128,226,697,712

87,848,895,187

40,377,802,525

68.5%

Mississippi  

NA

NA

NA

NA

NA

NA

NA

NA

NA

Missouri  

790,356

137,177

45,873

17.4%

5.8%

135,965,169,908

99,002,958,874

36,962,211,034

72.8%

Montana  

119,897

10,754

4,495

9.0%

3.7%

29,910,608,780

18,136,807,030

11,773,801,750

60.6%

Nebraska  

227,367

26,140

16,040

11.5%

7.1%

35,485,409,699

26,596,094,811

8,889,314,888

74.9%

Nevada  

561,341

343,256

25,063

61.1%

4.5%

96,568,981,251

109,936,874,715

-13,367,893,464

113.8%

New Hampshire  

223,860

47,206

12,762

21.1%

5.7%

52,699,180,822

38,034,520,295

14,664,660,527

72.2%

New Jersey  

1,889,417

329,780

82,017

17.5%

4.3%

655,363,198,659

418,701,553,494

236,661,645,165

63.9%

New Mexico  

251,100

36,898

12,129

14.7%

4.8%

56,104,872,577

38,862,088,844

17,242,783,733

69.3%

New York  

1,905,661

122,125

45,507

6.4%

2.4%

848,936,945,145

415,420,037,671

433,516,907,474

48.9%

North Carolina  

1,604,873

205,764

113,797

12.8%

7.1%

324,109,352,152

233,799,357,646

90,309,994,506

72.1%

North Dakota  

62,807

3,763

1,301

6.0%

2.1%

11,687,900,733

6,771,439,754

4,916,460,979

57.9%

Ohio  

2,207,464

526,802

134,473

23.9%

6.1%

310,622,713,190

238,196,377,605

72,426,335,585

76.7%

Oklahoma  

422,501

33,205

23,233

7.9%

5.5%

61,247,733,038

44,275,482,856

16,972,250,182

72.3%

Oregon  

701,541

131,126

42,036

18.7%

6.0%

172,656,348,042

122,373,947,542

50,282,400,500

70.9%

Pennsylvania  

1,854,017

156,376

71,044

8.4%

3.8%

399,534,396,104

246,942,559,780

152,591,836,324

61.8%

Rhode Island  

229,450

52,286

8,681

22.8%

3.8%

62,293,619,140

40,605,043,189

21,688,575,951

65.2%

South Carolina  

634,811

99,936

42,335

15.7%

6.7%

134,992,730,561

96,149,461,216

38,843,269,345

71.2%

South Dakota  

NA

NA

NA

NA

NA

NA

NA

NA

NA

Tennessee  

1,000,788

162,058

72,688

16.2%

7.3%

169,327,361,069

122,613,975,780

46,713,385,289

72.4%

Texas  

3,402,318

347,021

170,301

10.2%

5.0%

633,536,789,489

430,329,112,401

203,207,677,088

67.9%

Utah  

481,189

100,687

29,327

20.9%

6.1%

116,555,589,712

84,577,630,722

31,977,958,990

72.6%

Vermont  

NA

NA

NA

NA

NA

NA

NA

NA

NA

Virginia  

1,320,708

303,800

79,731

23.0%

6.0%

428,457,556,433

307,481,561,949

120,975,994,484

71.8%

Washington  

1,421,946

271,505

84,969

19.1%

6.0%

420,418,363,098

292,105,213,833

128,313,149,265

69.5%

Washington, DC  

100,081

12,446

4,163

12.4%

4.2%

50,032,885,011

28,867,300,896

21,165,584,115

57.7%

West Virginia  

NA

NA

NA

NA

NA

NA

NA

NA

NA

Wisconsin  

665,922

104,548

33,736

15.7%

5.1%

123,840,021,190

86,847,559,552

36,992,461,638

70.1%

Wyoming  

NA

NA

NA

NA

NA

NA

NA

NA

NA

US  

48,717,867

11,118,960

2,454,379

22.8%

5.0%

12,520,857,623,599

8,806,822,588,498

3,714,035,035,101

70.3%

* This data only includes properties with a mortgage. Non-mortgaged properties are by definition not included.

** Defined as properties in negative equity or within 5% of being in a negative equity position.


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