Underwater rates down substantially, foreclosures rapidly aging

by Ryan Smith06 May 2014
The percentage of American borrowers with negative equity has dropped substantially, and loans already in the foreclosure process are aging rapidly, according to data released Monday.

According to Black Knight Financial Services’ Mortgage Monitor Report, the national delinquency rate is currently just 5.52%.

“Two years of relatively consecutive home price increases and a general decline in the number of distressed loans have contributed to a decreasing number of underwater borrowers," said Kostya Gradushy, Black Knight’s manager of loan data and customer analytics. “Looking at current combined loan-to-value (CLTV), we see that while four years ago 34 percent of borrowers were in negative equity positions, today that number has dropped to just about 10 percent of active mortgage loans. While negative equity levels have declined for both judicial vs. non-judicial foreclosure states from the peak of the crisis, non-judicial states are now at just under eight percent, as compared to 13.4 percent in their judicial counterparts. Overall, nearly half of all borrowers today are both in positive equity positions and of strong credit quality - credit scores of 700 or above. Four years ago, that category of borrowers represented over a third of active mortgages.”

The study also found average home affordability, as a ratio of mortgage payment to income, to be better than it was in the years before the housing crisis – although the level of affordability varies considerably state to state. Nationally, the mortgage-to-income ratio is currently 22%. In 2006, only four states were below that level; now, nearly two thirds of the country falls below it. The most affordable states were Michigan, Missouri, Indiana and Iowa. The least affordable were California and New York.



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