25% of U.S. Mortgages Under Water

The number of under water U.S. mortgages increased by 620,000 from the third quarter. Additionally, another 2.3 million mortgageholders had less than 5% equity in their home, which could easily lead to an increase in under water holders if the housing market takes another small dip. It only fell about 1.1% in the fourth quarter, according to Standard & Poor, but some analysts predict another small dip. Analysts say the rise in negative equity is tied to increases in pre-foreclosure activity as once a homeowner owes 25% more than the house is worth, foreclosure rates spike. Negative equity exceeded 25% in six states and topped 20% in six others. The problematic mortgages are worst in the so-called sand states of California, Florida, Nevada and Arizona and also in Michigan and Georgia. In Nevada, 70% of mortgages are under water. In California, more than a third of mortgages are upside down.