More Americans are drowning in underwater mortgages and 1 state just saw a staggering surge

More American homeowners now owe substantially more on their mortgages than what their properties are worth, as a key measure of housing-market distress moves in the wrong direction.The share of US homeowners who are “seriously underwater” on their mortgages climbed to 3.2% in the second quarter, up from 2.7% a year earlier, according to a new state-by-state analysis from real estate data firm ATTOM.That means the combined balance of loans secured against the property is at least 25% greater than what the home itself is estimated to be worth.The problem worsened year-over-year in 33 states and Washington, DC — but nowhere was the shift as dramatic as Minnesota.The North Star State vaulted to the top of the nation’s underwater rankings, with a whopping 12.1% of mortgaged homes seriously underwater in the second quarter.That’s up from just 3% in the first quarter and 2.6% a year earlier — meaning Minnesota’s rate has more than quadrupled in just 12 months.Louisiana ranked second, with 10.3% of mortgaged homes seriously underwater.Unlike Minnesota, however, the state’s situation has actually improved: Its rate fell from 11.8% in the previous quarter and 11.9% a year earlier.Iowa landed in third place at 7.8%, up from 6% in the first quarter and 5.9% a year ago.Mississippi and Arkansas rounded out the five states with the highest shares, at 6.4% and 6%, respectively.The deterioration comes as another measure of homeowners’ financial cushion is also moving in the wrong direction.Just 41.1% of mortgaged US homes were considered “equity rich” during the second quarter — meaning the amount owed on the property was no more than half its estimated value — down from 43.3% during the first quarter and 47.4% a year earlier.That marked the fourth consecutive quarterly decline and brought the share of equity-rich homes to its lowest level in nearly five years, according to ATTOM.“These two measures of home equity strength, the rates of equity-rich and ...