Underwater borrowers have become a focus of numerous industry surveys and analyses, and a growing concern for market participants due to the potential of negative equity to trigger default.
A recent study by CoreLogic delved deeper into the statistics to examine the distribution of negative equity by default status.
Aggregate negative equity among mortgage borrowers was $750 billion as of the end of last year, according to CoreLogic's analysis.
Eight percent of that total balance, or $60 billion, involved mortgages that were in foreclosure, with the remaining $690 billion of negative equity not delinquent, CoreLogic reports.
The company found that for borrowers in foreclosure, negative equity was concentrated among lower valued properties.
Thirty-eight percent ($24 billion) of the collective negative equity for borrowers in foreclosure involved properties valued between $100,000 and $200,000. Ten percent ($6 billion) involved properties valued above $500,000.
With home prices still falling, CoreLogic says negative equity is the ""dominant factor"" driving the real estate and housing finance markets.
While CoreLogic shows that just 8 percent of the negative equity dollar count has slipped into foreclosure, the company says the level of home equity traditionally has affected the likelihood of default and that effect becomes even more pronounced in times of economic distress.
Lack of home equity has prevented borrowers from refinancing or selling and left many vulnerable to default in the event of adverse economic shocks such as unemployment, divorce, a medical event, or an increase in monthly mortgage payments, the company explained, adding that significant levels of negative home equity can indeed increase the probability of strategic default.
With nearly one-quarter of all mortgage borrowers underwater, CoreLogic describes negative equity in the marketplace as ""stubbornly high.""
The company's analysts also note that the impact on that looming shadow inventory could be significant.
CoreLogic says current shadow inventory has declined slightly over the past year, but will remain elevated for an extended period of time given that there are still over 2 million non-delinquent borrowers not part of the current shadow inventory but in ""very deep negative equity.""