The term negative equity was widely used in the United Kingdom during the economic recession between 1991 and 1996, and in Hong Kong between 1998 and 2003.
Some US states like California require lenders to choose between legal actions (such as wage garnishment) against the borrower or taking repossession, but not both.
[citation needed] It is also common for negative equity to occur when the value of a good drops shortly after its purchase.
This stands in contrast to lenders requiring borrowers to have an equity stake in a comparably-sized real estate loan, as described above, secured by both a down payment and a mortgage.
[citation needed] A homeowner who is under water might be financially incapable of selling their current house and buying another one.