Two Thirds Of All Nevada Mortgages Are Underwater

Tyler Durden's picture

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.

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Kaiser Sousa's picture

this is no doubt bullish...

dow 14,000.....

ACP's picture

I see all these facetious "bullish" comments (I've made my share), and realized, it's probably right. These criminal jokers at the Fed have one goal, and that is to keep all the money where they believe it rightfully belongs, which is amongst themselves.

And there is only one piece of the economy that they can "fix" with direct injections of cash, and that is the stock market. Fuckers, all. Burn the world to the ground in order to save their little baby.

Coke and Hookers's picture

Underwater mortgages are bullish for debt (slavery) based economy. Increased debt is the only thing that moves markets upwards these days so it's obvious that underwater mortgages are bullish. The more the better.

Increased debt is in reality the transfer of wealth from the middle/working class to the ruling corporate class engineered through bubbles, inflation and public future debt (bank bailouts). Markets are mostly based on the value of the ruling class's corporate assets and fiat profits. The more debt there is, the more wealth transfer there is and therefore the greater the value of the corporate class - and by proxy the market. This is bullish all around and we can expect to see a massive bull market on all fronts until the last dollar of real wealth has been sucked from the American people. (Then the people themselves will become an asset which can be collateralized - pretty much like livestock.)

The next step is to speed up the equities bubble and fleece every single pension fund in the country along with private citizens stupid enough to own stock. I predict stock market crash of epic proportions in a few months where the rest of the wealth not already confiscated by the ruling class will be transferred to our benevolant 1percent rulers.

J 457's picture

There needs to be a crash to justify another trillion dollar stimulus buying MBS.  I thought it was to happen last Oct and was wrong.  Now I think we're setting up for early April after the EU implodes end of March and prints several hundred billion more euros causing USD to surge.

dark pools of soros's picture

not sure there will be a crash anymore, since Israel wouldn't dare to lose even their handout money back into the stock market.  So it must mean fiat is toast and Robot Trader creams his pants from now until the reset

The Big Ching-aso's picture



Two turds is better than three turds.   I know this is a shitty thing to say.

lunaticfringe's picture

LMAO!! Ching-aso you are a funny mf'er.

DoChenRollingBearing's picture

+ 1

Yes.  One year member of the Lunatic Fringe Batallion of the Tin Foil Hat Brigade salutes his (probable) superiors!

TheSilverJournal's picture

Nationally, the amount of underwater houses is closer to 50%. Remember to include 6% for Realtor's fees and a small amount for other selling fees when considering if a house is underwater because truly being underwater is if the homeowner has to bring money to the table at closing.

blunderdog's picture

I call bullshit. 

One turd, when yer talkin' the size of a football, is way worse than three turds, when yer talkin' the size of marbles.

cranky-old-geezer's picture



I predict stock market crash of epic proportions in a few months where the rest of the wealth not already confiscated by the ruling class will be transferred to our benevolant 1percent rulers.

I don't believe they'll go the stock crash route. Stocks are their #1 illusion of a recovering economy.

I believe they'll go the indirect confiscation route via more currency printing and bailouts along with the direct confiscation route of stealing pension funds, 401k's, etc, then stealing brokerage accounts, bank accounts, etc under the banner of national emergency and / or national security.

Maybe a last step before it all collapses will be letting the stock market crash.  But then the game is over.  It's the end of the road for America.

Green Leader's picture

"...under the banner of national emergency and / or national security."

Hedge accordingly.

ltsgt1's picture

I think the dumb money is not taking the bait this time. The volume goes down as the markets rally, the big boys have set the trap but hardly no one is testing the water.

LongSoupLine's picture

Yes...blame the Fed. That is a no- brainer. However, getting deeper in thought, one must ask, where is the outrage from Nevada's "champion son"...Sen. Harry Reed?
Dig into ol' Harry boy's money trails and I'll bet my 1st born there's perfect reason why crickets are chirping in his camp.

j0nx's picture

Amen. Fuck Nevadans. They made their bed when they reelected Reid so I don't want to hear any bitching from them. The state can slide into the ocean along with California for all I care.

Confused's picture

Hahahahahahaha.....yes, Harry Reed!


Thanks for reminding me about that asshole.

sessinpo's picture

I thought I would give you nightmares for the rest of your life. How about Harry Reid and Nancy Pelosi having a child? I'm suicidal already.

Taterboy's picture

They did have a child and he's living in a big white house in D.C.

FeralSerf's picture

Mormons are Blankfein wannabees.  Harry's a Mormon. Remember that when you're at the Republican primary.

natty light's picture

The relationship between developers such as Harvey Whittemore and politicians such as Reid is especially close in Nevada, home to a small fraternity of movers and shakers, powerful demands of rapid population growth and a huge amount of federally owned land.

ArkansasAngie's picture

Yes ... it is bullish for those getting candy from the Fed and the government.

It is horse manure for the rest of us.

This has really gone too far.

Mark to market and default.  That's the only transfer of wealth that has any validity.

DaveyJones's picture

I thought in Vegas, the house always wins

Oh...that house

Wait, that analogy works

FrankDrakman's picture

I thought most of Nevada was a desert. Wouldn't having a lot of stuff underwater help with the drought and all?

Oh, and sorry, Davey, on your untimely death. Did you take the last train to Clarksville?

bgilliam83's picture

funny shit, somehow I have 2 properties in Nevada and neither are underwater.  I do give investment advice for free and right now it's buy everything not nailed to the ground, especially Nevada (even tho it is I guess?)

spankthebernank's picture

Amazing! Prepare to lose your ass buying that 'cheap' stuff, unnailed, floating whatever

lincolnsteffens's picture

It is not his ass he needs to worry about. It is his marbles. Maybe when his "cheap" properties are 50% underwater he will

have found his marbles. We are still only back to 12 year old prices, and that is in nominal dollars. When it is back to 1980

prices it might be a good time to start nosing around.

Maos Dog's picture

Sections of Broward County in Florida actually hit 1970 prices at one point last year. 

DoChenRollingBearing's picture

S. Florida MAY be on its way back, but, we'll see.  Caution!

respect the cock's picture

My best friend has 60 properties in Las Vegas.  Paid cash for all of them.

He's fucking crushing it.


Gromit's picture

It's not hard to learn new ideas. But it's very hard to shed old prejudices. Just as the bull market thta started March 09 left me on the sidelines, so many will miss real estate oportunities now.

What part of 2.75% 15 year FHA do you not understand?


Gromit's picture

Why do i post this these opinions which I know to be unpopular? Because if I can free just one Zhedger from his carapace of ignorance and prejudice my good deed for the day will be done.

tickhound's picture

Free them?  You mean suck them back in. 

Banks earn nothing from you saving anymore.  No real capital creation.  When the banking system entices, because it relies, on only your borrowing, it can't sustain jack shit.  Just short term juice.

Now is when you reply, "but the infinite growth model clearly demonstrates..."

 Do me a favor and skip to the next thing.

Oracle of Kypseli's picture

You are not wrong, when one wants to buy a lower priced house that he/she can afford compared to rentals. The problem becomes when interest rates jump, your equity disappears. And again you may still be okay if you still have a job in the same area.

In most cases however, people will be lured to a much higher monthly mortgage and will be locked for life. The safe bet is to rent and buy physical gold and silver. You can buy a house when you retire and do gardening by using $5k gold. 


blunderdog's picture

Who'd have thought Gromit would be so angsty?

sessinpo's picture

Dude, you are popular. You're just hanging out with the wrong crowd. sarc

J 457's picture

Solid markets simply don't have FHA or Homepath homes.  But the shit markets have thousands.  If you want a nice property in a nice neighborhood you'll have to pay a premium, even in a down housing market and economy.  If you want to move to Stockton Ca or Henderson NV, maybe you can get a Homepath property for 90k with 3% down and then deal with Sec 8 renters for a few hundred bucks positive cash flow a month. That is until your renters steal your water heater, cabinets, dishwasher and light fixtures to hock at the local swap meet and leave you three months unpaid rent and a mortgaged property that needs 25k to rehab.  No thanks, I'll pass.  If it sounds too easy and too good to be probably is.

AustriAnnie's picture

This is happening.  Housing values further decline because neighborhoods are going downhill due to Sec 8 renters.  The sad part is that homeowners who already own their homes or are making their payments are forced to live in a neighborhood that is going downhill around them.  For this reason I would hesitate to buy a home.  I know people who have bought, then ended up with next door neighbors they would rather not have, noise, vandalism, theft, etc.

J 457's picture

Use your gold credit card to buy a few Vegas homes..A cool 30k and your in.

Larry Dallas's picture

And all your tenants have Glen Lerner on speed dial for the moment you file an eviction. Or Golightly, even worse...

Good luck. Your tenants will bankrupt themselves and so will you by proxy.

Larry Dallas's picture

And all your tenants have Glen Lerner on speed dial for the moment you file an eviction. Or Golightly, even worse...

Good luck. Your tenants will bankrupt themselves and so will you by proxy.

Grimbert's picture

Are houses in Nevada not nailed to the ground? If I bought a house there could I end up in Oz?

sessinpo's picture

If you are referring to the Oswald State Correctional Facility, that would be very bad.

RobD's picture

Underwater bitchezs! I'm one of those in Nevada drowning in my house and I didn't buy anywhere near the peak.

J 457's picture

But at least maybe your neighbor got a HELOC and a new SeaDoo and Escalade.  Too bad it was at your expense once they stopped paying mortgage, house went REO, and was sold for half of what you paid.  The new comp was just set as your neighbor can now start anew and leave you holding the bag.  Many people in same situation.  It no longers pays to be "responsible."

bgilliam83's picture

By the way, Nevada is a HUGE buy right now.  It's not california, no state tax.  Comfortable life style and the gas is as cheap as it is in Oklahoma...

maxmad's picture

it has to stop at zero, right bgilliam?

prains's picture

love nevada's ersatz water

Cursive's picture


Word.  Why wouldn't anyone want to buy residential property in the dessert? (/sarc)