Negative Equity

Negative equity occurs when the value of an asset used to secure a loan is less than the outstanding balance on the loan. In the United States, assets (particularly real estate, whose loans are mortgages) with negative equity are often referred to as being "underwater", and loans and borrowers with negative equity are said to be "upside down".

People (and companies) may also have negative equity, as reflected on their balance sheets.

Read more about Negative EquityIn An Asset, Negative Net Worth

Other articles related to "equity, negative equity, negative":

Subprime Mortgage Crisis - Causes - Boom and Bust in The Housing Market
... Free cash used by consumers from home equity extraction doubled from $627 billion in 2001 to $1,428 billion in 2005 as the housing bubble built, a total of nearly $5 trillion ... This places downward pressure on housing prices, which further lowers homeowners' equity ... unexpected decline in house prices means that many borrowers have zero or negative equity in their homes, meaning their homes were worth less than their mortgages ...
Negative Equity - Negative Net Worth
... To say a person has negative equity is the same as to say they have "negative net worth" (where their liabilities exceed assets) ... One might come to have negative equity as a result of taking out a substantial, unsecured loan ... This stands in contrast to lenders requiring borrowers to have an equity stake in a comparably-sized real estate loan, as described above, secured by both a down payment and a mortgage ...

Famous quotes containing the words equity and/or negative:

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