The following article explains that 20% of all U.S. homeowners with mortgages are paying back loans that are worth more than the homes they purchased.

The numbers seem skewed by seven states. Hardly more than 1/3 of all mortgages with negative equity are held by homeowners living in the remaining 86% of the country.

The upside to having so many underwater loans in specific areas? The supply of homes being sold could increase exponentially in those states, driving prices down even further.

A few years ago, most people could only dream about homeownership in the cut-throat markets of Atlanta, southern California, and Orlando (etc.). With the current state of affairs, homeownership in these areas is a real possibility... and nothing satisfies an investor's sweet tooth quite like profit.

Here are the details:

NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.

About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.

The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.

Seven hard-hit states -- Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio -- had 64 percent of all "underwater" borrowers, but just 41 percent of U.S. mortgages.

"This is very much a regional problem, and people tend to forget that," said David Wyss, chief economist at Standard & Poor's, who expects home prices nationwide to fall another 10 percent before bottoming late next year.

"Most of the country is not in bad shape," he continued. "Things seem to be stabilizing in Michigan, but the big bubble states -- Florida, California, Arizona and Nevada -- are still very overpriced."

About 68 percent of U.S. adults own their own homes, and about two-thirds of them have mortgages.

JPMorgan Chase & Co, one of the biggest mortgage lenders, on Friday offered to modify $70 billion of mortgages to keep a potential 400,000 homeowners out of foreclosure. Bank of America Corp, which bought Countrywide Financial Corp in July, also has a large loan modification program.

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Source: Stempel, Jonathan. One in five homeowners with mortgages underwater. Copyright 2008 Reuters.com