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91% of US Homes Have Equity

by Tim Hart

After 759,000 properties regained equity in the second quarter, almost 45.9 million homes now have a higher property value than the remaining balance on their mortgage. In essence, 91% of US homes with mortgages now have equity—great news for the recovering US Housing Market.

At the end of 2014, 89% of US homes had equity, totaling 44.5 million homes.

Ninety five percent of mortgaged homes valued at 200k or more currently have equity. At the end of 2014, that number was at 94 percent of mortgaged homes.

Homeowners with lower home values struggled to get over the equity hump in comparison to those buying more expensive homes. But these homeowners also saw the biggest improvement over 2015. In 2014, 84% of buyers under 200k had equity in their home but in 2015, 87% now have equity.

Much of the country has recovered from negative equity issues seen during the recession. Five states alone contributed to nearly 32% of the negative equity seen in the entire US. Although terrible news for these specific states, the general outlook for the nation overall might be even more positive than these numbers suggest. The US states with the highest negative equity rate (% of mortgaged homes in state without equity) are Nevada (20.6%), Florida (18.5%), Arizona (15.4%), Rhode Island (13.8%) and Illinois (13.1%).

Montana was in the top 5 states for lowest percentage of negative equity homes. In March of this year, Montana had 97% of homes with mortgages in positive equity. Although certainly not major, that number has climbed to 97.2 percent.

If property values rise by an additional 4.7 percent, experts believe another 800,000 homeowners will have positive equity in their home by July 2016.




97% of Montana Borrowers Have Equity in their Home

by Tim Hart

If Montana already didn’t have enough positive trends for their housing market, more good news came from Realtor Magazine in mid March. The magazine released which states had the highest percentage of borrowers with positive equity in their home—and Montana ranked 3rd, at 97 percent. The magazine analyzed any property with an active mortgage in the United States to reach their numbers. Montana and the Gallatin County rebounded comparatively well from the housing crisis compared to many of the other states in the nation, but seeing how many borrowers in the state have equity in their home really cements that fact.

In the United States, 89% of homes ended 2014 with equity in their home—a great sign for the national housing market. 44.5 million homes had equity and if home prices rise by 5% another 1 million will no longer have negative equity.

Interestingly, home sale values greatly affected whether buyers have been sinking or swimming across the nation. For properties valued over $200,000, 94% of them had positive equity. For properties valued below $200,000, only 84% had equity.

5.4 million home owners are still underwater from the housing crash. The issue of negative equity continues to hold back the potential of the market but negative equity is expected to diminish in 2015. For Montana, the local market has been able to grow so much partly due to the financial freedom of buyers and sellers in the area.

Nevada had the highest percentage of home owners still with negative equity, at 24.2 percent.




Distressed Sales Decreasing

by Tim Hart

Distressed sales have decreased this last year, dropping to the lowest since records began in 2008. These sales accounted for 9% of the total sales last month. Distressed sales can include foreclosures and short-sales. Having less distressed property sales can only suggest the economic improvement that has taken place. Budge Huskey, President and CEO of Coldwell Banker Real Estate, said in a recent interview with Bloomberg that “We (the US) are moving from a market that was driven by the overcorrection, driven by distressed asset sales, to a market that’s returning to being based on the fundamentals,” suggesting that when less distressed sales are carried out, the general market will act less volatile. Cheaper borrowing costs have also helped the situation. An average 30-year fixed rate mortgage hit 4.1% the week of August 21st, the lowest this year. Residential construction start ups increased in July to an annual pace of 1.09 million units, the highest it had been in 8 months.



REO Price Increases Bode Well for Overall Market

by Tim Hart


Recent price increases with bank-owned homes are helping to provide an overall boost to the housing market, a recent report from Clear Capital says. 

Prices of REOs nationally rose 8.1 percent over year-ago levels on a median price-per-square-foot basis, according to Clear Capital’s May housing data. 

“Strength in the REO-only price trends as well as some early indications of price gains spreading from low-tier sectors to the mid- and higher-priced homes is helping confirm that the country continues to make progress on its recovery,” says Alex Villacorta, director of research and analytics at Clear Capital. “We are expecting to see improvements extend over the next several months.” 

Clear Capital also reported quarterly increases to overall prices, rising 0.4 percent for the quarter, the first quarterly gain posted since November 2011. The West saw the most growth in prices, rising 2.7 percent, followed by the South, with a 1.2 percent quarter-over-quarter gain, according to the report. 

Source: “Improving Foreclosure Prices Drive Recovery,” RISMedia (June 6, 2012)



Bank of America Offers $30K to Short Sale Owners

by Tim Hart

To curb the rate of foreclosures, BofA is offering $25,000-30,000 of assistance in relocation fees if they are willing to complete the short sale instead of foreclosure. Why? Banks are seeing short sales as a money saving avenue than if a homeowner falls into foreclosure. The difference between the two processes is simple; short sales tend to give the bank ownership of the home more efficiently leaving the condition of the property optimal for a speedy turn around on the selling end with low fees. In addition, data reveals that short sales bring in more money than foreclosures in the long run.

With that information at hand, banks have started to put forth special offers for homeowners struggling to enter into either short sales or foreclosures. BofA ran a pilot program in Florida and JPMorgan Chase piloted a similar program with the same incentive.

"This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," says Bob Hora, a Bank of America executive.

Source: “Bank of America Offering up to $30,000 for Short Sales,” CNNMoney (May 15, 2012) andBank of America

Read More

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Abandoned, Deteriorating Homes … Just Let Them Burn?




Standard & Poor’s Rating Services based on first-quarter 2012 data has produced its estimates. Regional procedural variations on judicial/non-judicial have provided much information on how much time is needed to clear the backlog of nonperforming loans.

“S&P includes in the shadow inventory all outstanding properties on which the mortgage payments are 90 or more days delinquent, properties in foreclosure, and properties that are REO. The agency also includes 70 percent of the loans that became current, or “cured,” from 90-day delinquency within the past 12 months because S&P says these loans are more likely to re-default.


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Latest News in Distressed Sales

by Tim Hart

JUNE 15th, 2012—That is the day that is supposed to change the distressed sales market altogether. Fannie Mae and Freddie Mac loans are to have a decision within the first 30-60 days. If more than the initial 30 days are needed to process a loan, the potential borrower will receive weekly updates and the decision will be reached by the 60 day mark.

This more regimented time-line will benefit both the servicers and the borrowers by increasing the overall accountability of the approval process. Servicers may counteroffer and expect a reply within five days. Borrowers and servicers alike will both know where in the process the transaction is and the timeline will serve as a tool of evaluation for the distressed sales system as a whole.

Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

What do you think about this change to come?


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Real Estate Market & Short Sales

by Tim Hart

The short sale trend is still surging. In fact, short sales are passing foreclosures in frequency because banks see it as a better route when compared to foreclosures. In addition, mortgage servicers are increasing the pace of approving short sales in order to move away from the stereotypes short sales have acquired of moving too slowly through the process.

The rate of short sales increased33% this last year and "[We] believe 2012 could be a record year for short sales," says Daren Blomquist, vice president at RealtyTrac. So cross your fingers that the process will be sped up and this year will continue to bring positive news to the market.


Source: “Short Sales Expected to Surge This Year,” CNNMoney (April 19, 2012) and “Short Sales Start to Outpace Foreclosures,” REALTOR® Magazine Daily News (April 19, 2012)


Government Reduces Foreclosure Inventory

by Tim Hart

In 2011, the government cut the foreclosure inventory by half. “From the end of 2010 to 2011, Freddie Mac, Fannie Mae, and the Department of Housing and Urban Development saw a 49 percent reduction in the number of REO properties it owns. The three government enterprises held about 150,700 properties as of Dec. 31, 2011, compared to 296,000 at the end of 2010.”


Who Decreased By How Much?

HUD: Reduced foreclosures by 32,000, a 47% decrease.

FANNIE MAE: Decreased by 118,000, 27% of its total inventory.

FREDDIE MAC: Dropped 16% of REO inventory, 60,500 compared to 72,000 in the prior year.


Read More

NAR: REO Rental Programs Largely Unnecessary

Determining the Speed of Foreclosures


Source: “Government-held REO Halved During Robo-Signing Freeze,” HousingWire (March 9, 2012)


Short Sales Continued Growth

by Tim Hart

Banks are changing their attitude on the infamous distressed sales by being more willing to agree to sale at a lower cost than ahome owner’s mortgage balance. This will ultimately avoid the property from shifting to the status of foreclosure for then the property becomes more costly for the lender.  The trend banks are taking to do more short sales is likely to “show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans," said RealtyTrac CEO Brandon Moore.

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Displaying blog entries 1-10 of 20