1 Million Borrowers Regained Equity in 2015

CoreLogic, Irvine, Calif., said one million borrowers regained equity in 2015, bringing the total number of mortgaged residential properties with equity at the end of the fourth quarter to 46.3 million, or 91.5 percent of all mortgaged properties.

Nationwide, borrower equity increased year over year by $682 billion in fourth quarter, the 13th consecutive quarterly increase. The CoreLogic analysis also indicated 120,000 properties lost equity in the fourth quarter compared to the third quarter.

CoreLogic said mortgaged residential properties with negative equity stood at 4.3 million, or 8.5 percent, in the fourth quarter, an increase of 2.9 percent from 4.2 million homes, or 8.3 percent, in third quarter but a decrease of 19.1 percent from 5.3 million homes, or 10.7 percent, from a year ago.

For the homes in negative equity status, the national aggregate value of negative equity rose to $311 billion at the end of 2015, up by $5.5 billion, or 1.8 percent, from $305.5 billion in the third quarter. Value of negative equity declined overall from $348 billion a year ago, representing a decrease of 10.7 percent in 12 months.

CoreLogic said of the more than 50 million residential properties with a mortgage, 9.5 million, or 18.9 percent, have less than 20 percent equity (referred to as “under-equitied”) and 1.2 million, or 2.3 percent, have less than 5 percent equity (referred to as near-negative equity)..

“The improvement in equity reflects positive home prices and continued deleveraging of mortgage balances by households,” said Frank Nothaft, chief economist for CoreLogic.

Other report highlights:
–Nevada had the highest percentage of mortgaged residential properties in negative equity at 18.7 percent, followed by Florida (17.1 percent), Illinois (14.6 percent), Arizona (14 percent) and Rhode Island (13.5 percent). These states combined account for 30.8 percent of negative equity in the U.S., but only 16.5 percent of outstanding mortgages.
–Texas had the highest percentage of mortgaged residential properties in positive equity at 98 percent, followed by Alaska (97.6 percent), Hawaii (97.6 percent), Montana (97.3 percent) and Colorado (97.1 percent).
–Of metropolitan areas, Miami had the highest percentage of mortgaged properties in negative equity at 22 percent, followed by Las Vegas (21.3 percent), Chicago (16.7 percent), Washington, D.C. (11 percent) and Boston (6.3 percent).
–San Francisco had the highest percentage of mortgaged properties in a positive equity position at 99.3 percent, followed by Houston (98.1 percent), Denver (98 percent), Los Angeles (95.5 percent) and New York (93.8 percent).
–Of the total $311 billion in negative equity nationally, first liens without home equity loans accounted for $171 billion, or 55 percent, in aggregate negative equity, while first liens with home equity loans accounted for $140 billion, or 45 percent.
–2.6 million underwater borrowers hold first liens without home equity loans. The average mortgage balance for this group of borrowers is $240,000 and the average underwater amount is $65,000.
–1.7 million underwater borrowers hold both first and second liens. The average mortgage balance for this group of borrowers is $304,000 and the average underwater amount is $82,000.
–The bulk of positive equity for mortgaged residential properties is concentrated at the high end of the housing market. Ninety five percent of homes valued at $200,000 or more have equity compared with 87 percent of homes valued at less than $200,000.

“Looking ahead in 2016, we expect home equity levels to continue to build, which is a good thing for the long-term health of the U.S. economy,” said Anand Nallathambi, president and CEO of CoreLogic.