Homeowners in Arizona, California, Georgia, Florida and Michigan account for about 60% of the nation’s homeowners who owe more on their mortgage than their house is now worth.

Nationwide, about 20% of homeowners with mortgages are underwater. Without those 5 states -- including 4 of the 10 largest states in the country, with the exception of Arizona -- the rate drops to 10%.

The totals underscore the depth of the housing downturn, as well as the challenges banks and Uncle Sam will have in turning the situation around.

Rising unemployment will make the situation worse for many homeowners. Those stuck with adjustable rate mortgages are almost certain to get hit with higher rates as the mortgages readjust. This could set off another round of foreclosures.

Home prices are down about 20% from their peak in mid-2006 and may continue to drop to about 40% from the peak. That would pull more homeowners under.

For some, this creates an incentive to walk away from the mortgage. This will put increased pressure on battered banks and stir further calls for government intervention. That’s more than a little ironic, considering that Fannie Mae (FNM) and Freddie Mac (FRE) played a major role in creating the current mess.

Higher mortgage rates and lower home values mean fewer people can tap a home-equity line of credit. This contributes to the general feeling of economic unease and causes many people to reduce spending and hoard cash. Overall, this is bad news for the economy because spending represents about 66% of the nation’s Gross Domestic Product.

But there’s good news for some: About 30% of Americans own their homes outright. That’s not enough to boost the economy, though, and most homeowners are hunkering down.