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Tag Archives: Home Equity

Rising Home Prices Help Older Americans, Hinder Younger Buyers

While last year's rising home prices brought relief to many underwater homeowners, allowing many older homeowners with increased net worth to purchase new homes, they also precluded many young first-time buyers from purchasing, according to a report from BBVA Group. ""Older homeowners are increasingly able to purchase a new residence with cash only after they sell their current home,"" said Jason Frederick, an economist for BBVA Compass.

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Recovery Expected to Enter ‘Middle Innings’ in 2014

While the housing market is still far from normal, it is inching that way, according to a report released Thursday from Zillow. Last year's skyrocketing home price appreciation, frenzied demand from investors, and high tide of negative equity are all expected to subside somewhat this year, according to the real estate company. In fact, some of the markets that posted the highest price gains in 2013 are already slowing, a welcome sign for those that were at risk of crossing into "bubble territory."

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Loans Originated Last Year Show Record Performance

Loans originated last year are the best-performing mortgage loans on record, according to the November Mortgage Monitor released Tuesday by Black Knight Financial Services (formerly Lender Processing Services). The Monitor also found a significant increase in non-agency loans, a sign that the market might be ready for more risk. Non-agency, first-lien, prime, jumbo loans have increased 75 percent over the year in November, according to Black Knight.

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More Homes Bounce Back from ‘Deeply Underwater’ Status

Underwater

According to RealtyTrac's latest data, approximately 9.3 million residential properties in December had a combined loan amount at least 25 percent higher than their market value. The figure represents about 19 percent of all properties with a mortgage. That number was down from 10.7 million deeply underwater homes (about 23 percent of all properties) in September and 10.9 million (26 percent) at the beginning of 2013. Meanwhile, the number of "equity-rich properties" grew to 9.1 million.

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2014 Forecast: New Year to Bring Mixed Trends

The forecast for 2014 includes a few bright spots, a couple of looming clouds, and some normalcy expected to precipitate the market, Realtor.com says in its outlook for the new year. Among the bright spots are the rising tide of positive equity and abating foreclosures. While 2.5 million homeowners rose from underwater during the year's second half, 7.1 million homeowners remain below water. However, "[t]he good news is that prices are expected to continue rising in 2014, which will lift more homeowners into positive territory."

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Negative Equity Rate Drops to 13%, Millions Still at Risk

Nearly 800,000 homes returned to a state of positive equity during the third quarter--leaving about 6.4 million underwater, according to the latest data from CoreLogic. The numbers indicate a little more complexity in the market, however. Of the 42.6 million residential properties in positive equity, CoreLogic estimates 10 million have less than 20 percent equity, and more than 1.5 million are at less than 5 percent equity. These "under-equitied" borrowers are at risk of falling back under should prices fall.

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Survey: West Home to Healthiest Housing Markets

A recent Zillow survey of market conditions around the country shows the healthiest markets can be found in the West, with San Jose, San Francisco, Los Angeles, San Diego, and Denver outclassing the rest of the country. Zillow chief economist Dr. Stan Humphries explained that rapid home value appreciation has improved local conditions in those markets, though the hit they'll take in terms of affordability may soon create unhealthy environments in what were once the healthiest markets.

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As Negative Equity Recedes, HELOC Worries Come to Light

Underwater

While the nation's negative equity rate continues to diminish--falling an estimated 7.4 percentage points since the start of the year through October--Lender Processing Services (LPS) says a new threat looms in the form of home equity loans. According to LPS' data, the average credit score for a borrower with a home equity line of credit (HELOC) originated in 2007 has fallen about 20 points since then, posing a threat to lenders who "are often on the hook for almost all of 2nd lien losses."

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Mortgage Rate Hikes Drain Pool of ‘Refinancible’ Loans

According to Lender Processing Services' data, the monthly prepayment rate--historically a good indicator of refinance activity--has dipped more than 30 percent in the months since May, with mortgage interest rates climbing nearly 100 basis points in that same time. As a result of those shifts, the percentage of borrowers in loans with interest rates high enough for refinancing to make sense has dropped significantly, says Herb Blecher, SVP for the technology and analytics firm.

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