Home prices have risen over the past two years and many distressed loans have worked their way through the system, the percentage of Americans in negative equity positions on their mortgage has declined considerably, Black Knight Financial Services’ “First Look” report for March shows.
Meanwhile, those loans already in the foreclosure process have been aging substantially.
According to Kostya Gradushy, Black Knight’s manager of Loan Data and Customer Analytics, both data trends point to a healthier housing market. ?
“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 Gradushy. “Looking at current combined loan-to-value, we see that while four years ago 34% of borrowers were in negative equity positions, today that number has dropped to just about 10% 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 8%, as compared to 13.4% 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.