Nearly 30 percent of Butler County homeowners have negative equity, according to figures from Zillow Inc., a real estate data company.

Having negative equity, or being “underwater” on a mortgage, is when the mortgage balance exceeds the worth of the property.

Many found themselves in this situation following the national housing market collapse that dropped property values in recent years. Butler County property values are still 19 percent below their peak, according to Zillow.

In surrounding counties, underwater mortgages are 24 percent of home loans in Warren County, 31 percent in Hamilton; and 36 percent in Montgomery.

Overall about 1 in 4 Ohio homeowners are underwater, or 25 percent.

Values are improving as the housing market gains steam. Nationwide almost 28 percent of U.S. homeowners with a mortgage were underwater at the end of 2012, also according to Zillow. At the end of 2011, it was 31 percent of U.S. mortgages.

Negative equity is being driven down by improving home prices, which trickles down to higher property values, a trend Zillow expects to continue into 2013.

The level of underwater mortgages were highlighted Wednesday by Sen. Sherrod Brown’s office, D-Ohio.

Underwater homeowners are more at risk for foreclosure. They have more difficulty selling their homes because they can’t get a high enough sales price to pay the loan off without coming up with the cash themselves.

Brown is reintroducing a bill this session of Congress requiring lenders to respond in a more timely manner to short sales to help the issue.

A short sale is a type of debt settlement in which the home is put up for sale, and the current lender agrees to accept less for the home than the amount still owed on it. Short sales are an option for homeowners who can’t afford their mortgages or are underwater.

Experts say short sales are preferable to foreclosure because in a short sale, a property is typically in better condition. Homeowners often still live there. Because short sale properties are in better shape, lenders and investors recover more of the value.

However, “short sales are anything but short,” Brown said.

Once a buyer makes a written offer, it’s common to have a break down in communication between the loan servicer and the buyer of the short sale property, Brown said.

“It means homes aren’t being sold even when there’s a willing buyer or willing seller,” he said. “It means that potential buyers who simply can’t wait weeks, and weeks … walk away. It means sellers who may need to move for a new job either don’t move or they take a huge financial hit.”

Brown’s proposed bipartisan legislation would require lenders to give written responses — a rejection, acceptance, counter offer, or request for extension — within 30 days or face a penalty.