An equity that has a negative value. This situation arises when an asset is worth less than the money used or borrowed to finance it. An example of negative equity is a house whose market price is lower than the remaining value of the mortgage obtained to buy it. Here, measures of negative equity include: 1) the difference between mortgage balance and underlying property value, and 2) current loan-to-value ratio (LTV ratio).
November 24, 2024
