Although the mortgage crisis has somewhat subsided in the United States, Lender Processing Services said that nearly one in five borrowers were still underwater in the first month of the third quarter.
LPS' July Mortgage Monitor report showed 18 percent of current mortgages were underwater, with Florida, Mississippi, Nevada, New Jersey and Illinois having the largest share of non-current loans.
The report also found mortgage delinquencies declined monthly, while foreclosure inventories remained near historic highs.
"The July mortgage performance data shows a continuing correlation between negative equity and new problem loans," said Herb Blecher, senior vice president at LPS Applied Analytics. "This suggests that further home price declines – should they occur – could jeopardize recent improvements."
Homeowners with negative equity have seen some relief in recent months, as home prices have increased in many regions of the country. The latest Standard & Poors/Case-Shiller Home Price Indices showed positive annual growth in the second quarter for the first time since 2010.
If home prices continue to improve, the negative equity problem should follow suit, which could potentially lead to mortgage delinquencies further declining.
