Although a majority of distressed homeowners are plagued by mortgages that far exceed the actual value of their homes, the number of homeowners with underwater mortgages is shrinking, according to Black Knight Financial Services’ latest Mortgage Monitor report.

Although a majority of distressed homeowners are plagued by mortgages that far exceed the actual value of their homes, the number of homeowners with underwater mortgages is shrinking, according to Black Knight Financial Services’ latest Mortgage Monitor report.

The mortgage industry technology and data analytics provider said that 77 percent of borrowers in foreclosure have underwater mortgages, and about a third of borrowers in active foreclosure have current loan-to-value ratios of 150 or more, meaning they owe 50 percent more than their homes are actually worth.

But the number of homeowners in negative equity positions has shrunk by 1.6 million in the last year, Black Knight said. In addition, negative equity distribution varies considerably depending upon geographical location and home values within a given market.

The top five states by percentage of borrowers underwater are Nevada (16.4 percent), Florida (15.1 percent), Maryland (14 percent), Illinois and New Jersey (13.7 percent). Florida and California account for 26.5 percent of the nation’s underwater population, and Florida alone makes up approximately 16 percent.

Of the 10 states with the highest levels of negative equity entering 2014, Missouri and Georgia have seen the greatest improvement, with underwater populations shrinking 47 and 43 percent, respectively, in those states. Only West Virginia and South Dakota saw increased negative equity over the past 12 months, rising from 7.6 to 8.3 percent and from 1.9 to 2 percent, respectively.

Overall, only about 8 percent of all borrowers are currently underwater on their mortgages, but we have seen a 30 percent reduction in the negative equity rate since this time last year, Black Knight said. Lower-value homes continue to struggle with negative equity and are nine times more likely to be underwater than homes in the top 20 percent value category.

The Mortgage Monitor report also examined a 12.2 percent drop in March in the mortgage delinquency rate, which was the largest monthly decline seen in nine years. Declines were seen across all stages of delinquency, with 30-day delinquencies hitting their lowest level in more than 10 years.

The month’s data also showed that “roll rates,” or loans rolling into a more delinquent status, have improved across the board as well. For every 10,000 loans that were current at the end of February, only 73 borrowers missed a payment in March, marking the lowest current-to-30 roll rate in over 15 years. Roll rates from 30 to 60 and 60 to 90 days delinquent hit their lowest levels since March 2006.

Finally, the rate of loans curing from 30 days delinquent to current status was 40.7 percent, the highest level since March 2005 and slightly above the 2000-2005 average of 40.4 percent.

Black Knight Financial Services, a Fidelity National Financial company, is a provider of integrated technology, data and analytics solutions for the mortgage industry. Mortgage Monitor is a report of mortgage industry performance based on Black Knight’s repository of loan-level residential mortgage data and performance information, including more than 40 million active loans across the credit spectrum.

Email Amy Swinderman.

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