Negative Home Equity a Continuing Problem

Santa Ana, CA, Nov. 24, 2009--Roughly 23% of homeowners with mortgages owe more  than their properties are worth, according to First American CoreLogic, a real-estate information company.

Nearly 10.7 million homeowners had negative equity in their homes in the third quarter, the company said.

Home prices have fallen so much that 5.3 million U.S. households have mortgages that are at least 20% higher than their home's value, the First American report said.

More than 520,000 of these borrowers have received a notice of default, the company said.

Negative equity "is an outstanding risk hanging over the mortgage market," said Mark Fleming, chief economist of First American Core Logic.

"It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job."

More than 40% of borrowers who took out a mortgage in 2006 -- when home prices peaked -- are under water, the analysis said.