A few years ago, many homeowners in America opted for adjustable-rate mortgages or interest-only loans. As their interest rates and loans reset rose, home values began to decline sharply. This resulted in negative equity, which meant that the value of their home was less than the mortgage. Subsequently, millions of Americans have lost their homes over the past few years. Other factors such as bad mortgage lending, and high unemployment rates are driving up the rate of foreclosure in the U.S.

However, even with positive equity, it is possible to have high foreclosure rates. If an area has high foreclosure rate with positive equity, this can be explained in two ways. Either the current assessed value of the home (which is used to calculate positive equity) is higher than the current market value of the home, or the reset adjustable rate mortgages are too much for the homeowners. For areas where both are true, it indicates that more foreclosures are imminent as appraised values and ARMs reset decline to the level of present market values.

According to a recent U.S. market foreclosure report, cities in Florida, California, Arizona and Nevada have posted the nation’s highest foreclosure rates. Among metropolitan areas with a populace of 200,000 or more, these states have accounted for 35 of the 50 highest foreclosure rates. In the past few months, some of the most foreclosure-prone metropolitan areas in Ohio, California, Indiana and Michigan documented lower foreclosure activity. However, some other areas of the country are now reporting increased levels of foreclosure. Some of the metropolitan areas that are now showing a high level of foreclosure activity are Utah, Idaho, Arkansas, South Carolina, Oregon and Illinois. This suggests that most of the foreclosure activity is due to growing unemployment rather than continuing fallout from adjustable rate loans or subprime.

In the past one year, Las Vegas has posted the nation’s highest foreclosure rate, with one in 13 (7.45 percent) of its housing units getting at least one foreclosure filling – more than five times the national average. The Cape Coral-Fort Myers area in Florida recorded the second highest foreclosure rate, with one in every 14 (7.20 percent) of its housing units getting at least one foreclosure filing. Merced, California recorded the third highest metropolitan foreclosure rate, with one in 15 (6.89 percent) of its housing units getting at least one foreclosure filing. Other Californian cities in the top 10 were Stockton (5.64 percent), Bernardino-Ontario (5.73 percent), Bakersfield (4.53 percent), Modesto (5.83 percent), Stockton (5.64 percent) and Vallejo-Fairfield (4.48 percent). Others are the Orlando, Florida (4.28 percent) and Phoenix (4.44 percent).

Detroit’s foreclosure rate has been ranked among the nation’s top 50, with 1.85 percent of its housing units getting at least one foreclosure filing. However, the foreclosure rate there has decreased significantly in recent months. Cleveland’s foreclosure rate is still higher than the national average, with one in 73 (1.36 percent) of its housing units receiving a foreclosure filing. However, it has not been listed among the top 50 metropolitan foreclosure rates.