Negative equity remained high despite increasing home values in the latter part of the first quarter. A slower pace of foreclosures after the robo-signing issues of 2010 contributed to slower progress in working down negative equity. Foreclosures cause homes to come out of negative equity when a bank or third party takes ownership.

Despite the high rate of negative equity, the majority of underwater homeowners are current on their mortgages. Nine in 10 continue to make their mortgage and home loan payments on time, with just 10.1 percent of underwater homeowners more than 90 days delinquent.

“While it was disappointing to see negative equity numbers remain so high, it is important to note that negative equity remains only a paper loss for the vast majority of underwater homeowners,” said Zillow Chief Economist Stan Humphries. “As home values slowly increase and these homeowners continue to pay down their principal, they will surface again.

“That said, negative equity remains an issue for the housing market as a whole, and poses a risk to any recovery. Not only does negative equity tie many to their homes, by making homeowners unable to move when they may want to, but if economic growth slows and unemployment rises, more homeowners will be unable to make timely mortgage payments, increasing delinquency rates and eventually foreclosures.”

Additionally, many homeowners in negative equity are not deeply underwater. Nearly 40 percent of underwater homeowners, or 12.4 percent of all homeowners with a mortgage, owe between 1 and 20 percent more than their home is worth. An additional 21 percent of underwater homeowners, or 6.6 percent of all homeowners with a mortgage, owe between 21 and 40 percent more than their home is worth.

However, about 2.4 million, or 4.7 percent of all homeowners with mortgages owe more than double what their home is worth. In the Las Vegas metro area, nearly 90,000, or 26.8 percent of homeowners with mortgages owe double.

On a state level, Nevada has the highest percentage of negative equity, with 66.9 percent of all homeowners with mortgages underwater. Arizona (52.3 percent), Georgia (46.8 percent), Florida (46.3 percent) and Michigan (41.7 percent) also have highest percentages of homeowners in negative equity.

These results are from the first edition of the new Zillow Negative Equity Report, which looks at current outstanding loan amounts for individual owner-occupied homes and compares them to those homes’ current estimated values. Loan data are provided by TransUnion®, a global leader in credit and information management. This is the only report that uses current outstanding loan balances on all mortgages when calculating negative equity. Other reports estimate current outstanding loan balance based on the most recent loan on a property (i.e., the original loan amount at time of purchase or refinance).

Key facts:

– Nearly 16 million homeowners were underwater on their mortgages in the first quarter of 2012, owing a collective $1.2 trillion more than their homes were worth. That is nearly one-third (31.4 percent) of U.S. homeowners with mortgages, compared to 31.1 percent in the fourth quarter of 2011.

– Foreclosure is not imminent for most underwater homeowners. Nine out of 10 continue to make their mortgage and home loan payments on time, with only 10.1 percent more than 90 days delinquent.

– Many homeowners in negative equity are not deeply underwater. Nearly 40 percent of underwater homeowners owe between 1 and 20 percent more than their home is worth. However, 15 percent of underwater homeowners – approximately 2.4 million – owe more than double what their home is worth.

– In some markets, however, the magnitude of negative equity is much greater. In the Las Vegas metro area, more than one-quarter of all homeowners with mortgages owes more than double what their home is worth.