Bad news for the near recovering housing market and nearly a quarter of all mortgage borrowers are underwater, meaning their homes are worth below what they owe on their loans.

First American CoreLogic, a research firm monitoring housing equity, reported Tuesday that 24 percent of homeowners with mortgages are underwater. This translates to 11.3 million homeowners.

That's 23 percent above 10.7 million borrowers as recorder three months earlier.

Nevada got the worst record with 70 percent of all mortgaged homes underwater. That was followed by Arizona with 51 percent, Florida with 48 percent, Michigan 39 percent and California 35 percent.

For many homeowners with negative equity the other term for being underwater can spell disaster especially if they suddenly be in financial need after having been unemployed where they have no equity to draw upon.

But if homeowners with mortgages can afford their monthly bills and are not planning to sell they can always wait for the price to go up.

"Negative equity is a significant drag on both the housing market and on economic growth,"said Mark Fleming, chief economist with First American CoreLogic. "It is driving foreclosures and decreasing mobility for millions of homeowners."

With negative equity remaining to be a big problem, it will be difficult to stop foreclosure s as equity becomes more and more negative, homeowners choose to quit paying rather than pay off their mortgages.

"Since we expect home prices to slightly increase during 2010, negative equity will remain the dominant issue in the housing and mortgage markets for some time to come," said Fleming.