Cascading home values after an era when lenders let borrowers buy homes or refinance old loans with little or no downpayment has created a large class of property  owners with “negative equity” — a polite phrase for having a mortgage bigger than the home’s worth. (Less polite? “Under water” or “upside down” mortgages!)

According to number-crunching CoreLogic, 17.5% of Orange County homes with a mortgages — or 98,518 residences — were in a negative equity position in the third quarter. Yes, that means roughly 1-in-6 O.C. mortgages are bigger than the value of the real estate collateral behond the loan. Another 4.1% of homes with mortgages, or 22,942 residences, were “near” negative equity. (That’s within 5% of negative equity.) So, all told, 21.6% are underwater or nearly upside-down locally. As bad as that sounds — and it’s not pretty — we offer some comparisons:
  •  22.5% of all U.S. homes with mortgages were in negative equity territory with an extra 5% of residences near negative equity. That’s 27.5% combined!
  • 32.8% of California residences are in negative equity; another 4.1% are near negative equity. Combined: 36.9%.

And the local trend itself is a tad encouraging:

  •  In 2010’s second quarter, 18.1% of homes with mortgages were underwater; 4.1% were near negative equity. Combined: 22.2% — slight higher that Q3.
  • In Q1, negative equity rate was 19.2%; near negative equity was 4.1%. Combined: 23.3%.
  • In 2009’s fourth quarter, negative equity rate was 20%; near negative equity was 4.1%. Combined: 24.1%.

Mark Fleming, chief economist with CoreLogic, on the national scene: “Negative equity is a primary factor holding back the housing market and broader economy. The good news is that negative equity is slowly declining, but the bad news is that price declines are accelerating, which may put a stop to or reverse the recent improvement in negative equity.”

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