The lop five states with the highest share of negative equity loans
had an average negative equity ratio of 41.
In addition to the current shadow inventory, there are 2 million current negative equity loans
that are more than 50 percent or $150,000 "upside down.
An examination of borrower and loan characteristics by equity status shows that, not surprisingly, the most striking difference between positive and negative equity loans is the combined (senior plus junior) LTV ratio at origination; in each MSA, average initial LTVs are significantly higher on negative equity loans (Table 4; Table 5 provides the same information for states, using the OFHEO index).
We also find that while negative equity loans exist in most U.
The number of negative equity loans at the end of June represented 22% of the total mortgage borrowers, while its amount was 33% of the total outstanding value.
It is encouraging that the ratio of delinquent negative equity loans has declined.
In addition to the current shadow inventory supply, there are nearly 2 million current negative equity loans
that are more than 50 percent" upside down" that will likely become shadow supply in the near future.