Negative Equity Rate Falls by Nearly 30 Percent Year-Over-Year

The number of residential mortgage borrowers in a negative equity position during January 2015 was reported at slightly more than four million, which is a decline of 29 percent from the same period in 2014, according to Black Knight's March 2015 Mortgage Monitor released Monday.

The four million underwater borrowers represented about 8 percent of all residential mortgage loans in the country during January 2015. A year earlier, 5.7 million borrowers were underwater, representing 11.4 percent of the nation's residential mortgages. According to Black Knight, the January 2015 population of slightly more than four million borrowers with negative equity is down to approximately one quarter of the negative equity population at its peak of 30 percent, reached in 2011.

Within the underwater borrower population, 29 percent of those borrows are seriously delinquent on their mortgages and 66 percent of seriously underwater borrowers are either 90 or more days delinquent on their mortgages or in foreclosure, according to Black Knight.

Also according to Black Knight's report, underwater borrowers comprise about 75 percent of the nation's seriously delinquent and foreclosure inventory. Approximately one in every three borrowers that were currently in foreclosure had a current loan-to-value ratio of 150 percent or greater, which means they owe at least 50 percent more than the value of their homes. The number of properties in pre-sale foreclosure inventory as of the end of March was 782,000, according to Black Knight, which represented about 1.55 percent of all residential mortgages.

The state with the largest percentage of underwater borrowers was Nevada with 16.4 percent, followed by Florida, Maryland, Illinois, and New Jersey. While approximately 15.1 percent of borrowers in Florida were underwater, the Sunshine State accounted for 16 percent of the nation's total underwater borrower population. Florida and California combined made up more than one quarter (26.5 percent) of the national total of underwater borrowers. Only two states (West Virginia and South Dakota) experienced a year-over-year increase in negative equity population.