A national report released by CoreLogic has found that nearly one in every five Colorado home owners owes more on their mortgage loans than what the home is worth. In all, more than 221,000 Colorado homes are currently experiencing negative equity. While this is certainly a sobering statistic, the state of Colorado is still holding strong in the number 13 position when compared to the other states. Furthermore, the 19.6% statistic is still far better than Nevada, which is currently sitting in last place with 66.5% of homeowners being underwater. It is also better than the current national average of 22.6%.

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

Although the state’s percentage is lower than the national average, experts warn that the statistic isn’t as good as it seems on the surface. In fact, only seven states have a percentage that is higher than the national average, but there percentages are so high that it skews the national average severely. Furthermore, in addition to the percentage of homes that are already in negative equity, the report found that 8.1% of homes were “near negative equity,” which means those homes are within 5% of being in negative equity.

Still, things may not be as bleak as they seem.

“That may reflect the large number of home loans being written in the past couple of years that had FHA loans that only required a 3 percent down payment,” said Rinner. “So if values have gone down 4 percent, they technically have negative equity. But those were loans that were made with the lenders’ eyes wide open. They probably used very sound underwriting standards. It’s not like the old days when all you needed to do was prove you can breathe to get a loan. Now, lenders are actually demanding that you be employed and check your credit history.”

In fact, according to some experts, some lenders may be being too conservative as they lend to only their best customers. Furthermore, some are concerned that lenders are not willing to provide loans to those who are self-employed or to those who do not work for a large company. Not everyone agrees with this assertion, however, as Rinner believes lenders have simply “returned to traditional underwriting standards.” Rinner also notes that buyers themselves are being more conservative.

“One trend I am seeing is that people are buying less home than they could qualify for,” said Rinner. “They’re being much more conservative. So even if they have a small amount of negative equity, they can ride it out.”