September Foreclosure Update

Data from the latest U.S. Home Equity & Underwater Report from RealtyTrac® (www.realtytrac.com), “the nation’s leading source for comprehensive housing data,” shows that rising home prices are having a continued positive impact for homeowners with distressed mortgages.

The report reveals that currently there are 10.7 million residential homeowners nationwide, representing 23 percent of all residential properties with a mortgage, that are “deeply underwater” and owe at least 25 percent or more on their mortgages than what their properties are worth.

Though those numbers are still way outside the norm, they are substantially below the 12.5 million properties, representing 28 percent of all properties at the time, that were deeply underwater one year ago, and also are lower than the 11.3 million properties (26 percent of all properties) in the same condition in May of this year.

Better news is that rising home prices have helped another 8.3 million homeowners so that their mortgages now are “either slightly underwater or slightly above water, putting them on track to have enough equity to sell sometime in the next 15 months — without resorting to a short sale.”

Defining further the “slightly underwater or slightly above water” criteria RT says the loan to value (LTV) ratio for these 8.3 million properties have LTVs from 90 to 110 percent, meaning they have between 10 percent positive equity and 10 percent negative equity. The 8.3 million properties represent 18 percent of all U.S. homeowners with a mortgage as of the beginning of September.

Daren Blomquist, vice president at RealtyTrac stated that, “Steadily rising home prices are lifting all boats in this housing market and should spill over into more inventory of homes for sale in the coming months.”

Bloomquist adds that, “nearly one in four homeowners in foreclosure has at least some equity, giving them a better chance to avoid foreclosure without resorting to a short sale — assuming they realize they have equity and don’t miss the opportunity to leverage that equity. Even homeowners deeply underwater have reason for hope, with about 150,000 each month rising past the 25 percent negative equity milestone — although it will certainly take years rather than months before most of those homeowners have enough equity to sell other than via short sale.”

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