California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

More than a quarter of all U.S. residential properties were either in
negative “underwater” equity, or very close to that point, as of September,
according to an analysis by First American CoreLogic, a real-estate data
provider based in Santa Ana.

The heaviest concentration of these homes is in states struggling with runaway
foreclosure rates.

The average mortgage debt for properties in negative equity was $280,000.
Borrowers were in a negative equity by an average of nearly $70,000.

The distribution of negative equity is heavily concentrated in five states:
Nevada (65 percent), which had the highest percentage negative equity; Arizona
(48 percent); Florida (45 percent); Michigan (37 percent); and California
(35 percent).

Among the top five states, the average negative equity share was 40 percent,
compared to 14 percent for the remaining states. Most of these homes were
financed between 2005 and 2008, peaking in 2006 – where 40 percent of borrowers
were in negative equity.

Nearly 10.7 million, or 23 percent, of all residential properties with mortgages
were in negative equity, while an additional 2.3 million mortgages were
approaching negative “underwater” status, meaning they had less than five percent
equity, reported First American CoreLogic, a real-estate data provider based in
Santa Ana, Calif.

I am Tim Johnson and this has been the California Business Minute.