Negative equity
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Negative equity is a deficit of owner's equity, occurring when the value of an asset used to secure a loan is less than the outstanding balance on the loan.[1] 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".
The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (October 2016) |
People and companies alike may have negative equity, as reflected on their balance sheets.