A newly released government report indicates that most subprime borrowers in the Las Vegas, Phoenix and Miami metropolitan areas are underwater, while at least half are upside-down in eight other major markets.
Nationally, around one-quarter of nonprime borrowers owed more on their homes than their properties were worth, according to a report released today by the Government Accountability Office. The study of subprime and Alt-A loans was prepared during December for the U.S. House of Representatives’ Joint Economic Committee.
In Las Vegas, where an estimated 92,949 nonprime mortgages are located, 87,685 — or 94 percent — are in a negative equity position.
The findings were based on data as of June 30, 2009.
Not far behind is Phoenix, where 89 percent of its estimated 131,069 nonprime loans have a loan-to-value in excess of 100 percent.
Around 86 percent of Miami’s 225,355 nonprime borrowers are upside-down, while 81 percent of the estimated 49,435 mortgages in Minneapolis have negative equity.
In Tampa, Fla., 79 percent of its roughly 85,641 nonprime mortgages are underwater.
Other metropolitan areas where more than half of subprime borrowers were underwater included San Diego; Chicago; Washington, D.C.; Los Angeles; Atlanta; and San Francisco.
But the story was different in Denver, where just 9 percent of its approximately 60,280 nonprime borrowers were in a negative equity position.
Negative equity was more likely for subprime borrowers than Alt-A borrowers, the GAO said. Also, purchase transactions were more likely to be above 100 percent LTV than refinances.
Fixed-rate borrowers were in a better equity position than adjustable-rate borrowers, but owner-occupied loans were more likely to be above 100 percent LTV than investor mortgages.
