Negative equity refers to a situation where an individual or entity owes more money on their mortgage than what their property is worth. In other words, it means that the value of the asset (usually a house) has decreased and the debt remains high. This can occur due to a decline in real estate market values, economic downturns or natural disasters. Negative equity can make it difficult for homeowners to sell their property, refinance their mortgage or even secure financing for repairs. It is often associated with financial stress and can lead to foreclosure if the situation worsens.