Two Thirds Of All Nevada Mortgages Are Underwater

The latest quarterly report out of CoreLogic is as usual full of curious insights about the state of US housing. Key among them is the finding that "negative equity and near-negative equity mortgages accounted for 27.8 percent of all residential properties with a mortgage nationwide in the fourth quarter, up from 27.1 in the previous quarter. Nationally, the total mortgage debt outstanding on properties in negative equity increased from $2.7 trillion in the third quarter to $2.8 trillion in the fourth quarter." In other words, courtesy of no Mark To Market, there is at least $2.8 trillion in debt held by investors (read banks and GSEs) that is marked at par and should be impaired. And one wonders why Fannie lost $16.9 billion in 2011 (up from $14.0 billion in 2010), and needed another taxpayer injection of $4.6 billion in Q4: it is so banks can pretend reality exists, and in the process avoid evicting tenants who live in these underwater homes, and who can pretend they don't have to pay their bills, but can spend money on iGadgets instead. Yet the scariest data point is that if one is currently in Nevada and looks at three houses right this second, two of them are underwater, or said otherwise, have negative or near-negative equity.

Among the other findings:

• Nevada had the highest negative equity percentage with 61 percent of all of its mortgaged properties underwater, followed by Arizona (48 percent), Florida (44 percent), Michigan (35 percent) and Georgia (33 percent). This is the second consecutive quarter that Georgia was in the top five, surpassing California (30 percent) which previously had been in the top five since tracking began in 2009. The top five states combined have an average negative equity share of 44.3 percent, while  the remaining states have a combined average negative equity share of 15.3 percent.
• Of the 11.1 million upside-down borrowers, there are 6.7 million first liens without home equity loans. This group of borrowers has an average mortgage balance of$219,000 and is underwater by an average of $51,000 or an LTV ratio of 130 percent. For all first-lien-only borrowers negative equity share was 18 percent, while 41 percent of all first-lien-only borrowers had 80 percent LTV or higher.
• The remaining 4.4 million upside-down borrowers had both first and second liens. Their average mortgage balance was $306,000 and they were upside down by anaverage of $84,000 or a combined LTV of 138 percent. The negative equity share for all first-lien borrowers with home equity loans was 39 percent, more than twice the share for all first-lien-only borrowers. Over 60 percent of borrowers with first liens and home equity loans had combined LTVs of 80 percent or higher.
• Nearly 18 million borrowers were between 80 percent and 125 percent LTV and, purely from an LTV perspective, eligible for HARP 1.0. The removal of the 125 percent LTV cap via HARP 2.0 means that over 22 million borrowers are currently eligible for HARP 2.0 when just considering LTV alone.
• The low end of the market is where the bulk of the negative equity is concentrated. For example, for low-to-mid value homes valued at less than $200,000, the negative equity share is 54 percent for borrowers with home equity loans, over twice the 26 percent for borrowers without home equity loans.
• Of the total $717 billion in aggregate negative equity, first liens without home equity loans accounted for $342 billion aggregate negative equity, while first liens with home equity loans accounted for $375 billion. Over $230 billion in negative equity is from homes valued at $200,000 or less.
• There were 8.8 million negative-equity conventional loans with an average balance of $269,000 that are underwater by an average of $70,000. There were 1.7  million underwater FHA loans with an average balance of $169,000 that are underwater by an average of $26,000.

Those curious what the LTV histogram of US housing looks like, here it is:

More in the full report.

Comments

[BlackholeDivestment]

http://www.youtube.com/watch?v=-io-kZKl_BI 

Reading the data, all I see is a voilent force that does not agree, even with it's self. I'm not going to buy that. Lol, and sure as all get out ...not going to commit to suicide. LMAO.  http://www.youtube.com/watch?v=Zb4JY2mr-_Y

[upb]

they should all just go out and GAMBLE!!! LOL    Vegas BABY   http://tinyurl.com/7rsbrdh

[Threeggg]

You think this residential problem is bad ?

Think about the commercial side this year. Commercial loans need to be refinanced every 2 and 4 years. How many banks did a mod on the loans in 2010 to extend and postpone the refi to 4 years thinking the prices would rebound ? They have gotten worse.

Think about all the loss carry forwards that will be tax negative for the next 100 years. Banks pay no taxes on writedowns/offs (they never did in the first place) and shrinking corporations removing equity from their balance sheets?. Combine all this with 10,000 baby boomers retiring a day and these jobs being replaced with flipping burger gigs, you ask yourself one question. Where in the hell is all this tax money going to come from to keep this overgrown public government system levitated, while the largest amount of public servants "snick" retire and start recieving those bennies they were promised..............for the rest of their life? 

Where?..............................answer................where it comes from now.......................a....................printing press.

[SAT 800]

Agreed. The commercial side is very, very, bad. Some time in the not too distant future we will have commercial real estate scrambled eggs on our face. for right now, it's party on time!.

[haskelslocal]

Sounds nice but never to be true. That proverbial "shoe" has threatened the fall for decades. Each and every move downward economically only affords new and improved tax laws designed first to support but incidentally to improve profits for CRE owners/investors. Tax claw backs. Future writedowns. NetNetNet lease obligations, all designed to eat at and disolve profit margins for the real entrepreneurs running small businesses.

The biggest issue is Amazon like and jungle in size. Factory wearhouses with internet shopping portals is the dagger in the side.

ZH ran a fantastic report a few years back on the power of historic property ownership. Wish I knew a better way to surf the archive to find it.

[unemployed]

The mortgage service/foreclosure/HELOC industry will optimize the non mortgage satisfaction "short" sales to maximize the debt to slavery ratio come bankruptcy or global warming.

[billsykes]

So why did Kyle Bass buy that mortgage company a little while ago?

[SAT 800]

So what, I don't live in Nevada. (Presented as a typical readers' response ),

[Dr. Hannibal Lecter]

Harry Reid bitchez!

[mendolover]

I sold my house in CT in 2005 and made 100% from the purchase in 1997.  I almost moved to Reno to start a construction safety equipment franchise with my windfall.  That was close!

[j0nx]

2 words: Harry Reid. Suck on it Nevadans! Couldn't happen to a better bunch of folks.

[cnhedge]

2.8 trillion negative equity? that's a lot.

http://www.jinrongbaike.com/
http://www.cnhedge.com/

[GMadScientist]

Move em all to Utah and use Nevada for toxic waste disposal.

[Lost Wages]

Proud Nevadan here, still living in my home for free because a certain TBTF entity hasn't bothered to foreclose on the home we surrendered in our Chapter 7. Will be interesting to see how long it takes them in the end. Stopped paying in May '11. Got discharge in November. Got a letter from their lawyer saying he was starting foreclosure process in December. Could be awhile yet. Who knows? Our lawyer said one couple had their discharge for 8 months and was still in their home. It's been about 3 for us now. So even post-bankrtupcy surrender foreclosures are slow at this point.

It's been a rough time here in Nevada in the last decade, but now that we're getting our financial shit together for the first time, I'm glad to live in the silver state. Buyin' up rounds & bars. Ka-ching.

[q5251355]

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