Pennsylvania and New Jersey remain well below the national average in the number of single-family houses now worth less than the remaining mortgage, according to a new study.

In Pennsylvania, 5.7 percent of the state's 1.413 million single-family homes had negative equity, according to the study, released Friday by First American CoreLogic Inc. It was the company's first state-by-state assessment of homes worth less than the amount of the mortgage.

Nationally, more than 7.5 million mortgages - 18 percent of all properties with a mortgage - were in negative-equity position or, as it is often known, "under water," as of Sept. 30, the California company reported.

About 9.3 percent of New Jersey homes with mortgages were in negative-equity territory, the study said. Its overall analysis suggested that most of those houses were in the higher-priced northern areas of the state, near New York.

A third-quarter report last month by RealtyTrac Inc., the Irvine, Calif., firm that tracks foreclosures nationwide, showed a year-over-year increase in filings in the northern part of the state.

Nationally, negative equity is heavily skewed to a small number of states. Nevada (49 percent of all mortgages) and Michigan (39 percent) have the highest percentages of negative equity, followed by Florida and Arizona (29 percent each); California (27 percent); Georgia (23 percent); and Ohio (22 percent).

The top six states accounted for more than 58 percent of all negative-equity mortgages, although they represent just 36 percent of all mortgages, CoreLogic reported.

Patrick Newport, an economist at IHS Global Insight Inc., a Waltham, Mass., economic-information company, agreed with the estimate by CoreLogic, but said most borrowers with homes "underwater" would not default. His reasoning: First, as a matter of principle; second, because walking away from a home damages a person's credit for years afterward; third, because they plan on living in the house for years and can afford the payments; and finally, because they expect the market to recover.

Even so, Newport said: "Unfortunately, default rates will likely rise as the unemployment rate goes up."

Joel L. Naroff, the chief economist of the former Commerce Bancorp Inc., which is now TD Bank, said being underwater and losing homes were two totally different issues.

"All that matters is the ability to pay the mortgage, not the price of the home," he said. "With minimal price declines [3.78 percent, according to CoreLogic], this area is not in great danger from the housing-market decline."

"The economy is another thing," Naroff said.

In the Region

Homes worth less than the current mortgage*:

Total Number

mortgages under



1,413,181 79,978

New Jersey

1,748,179 162,411


142,137 14,585

*As of October

SOURCE: First American CoreLogic Inc.

Contact real estate writer Alan J. Heavens at 215-854-2472 or