ATTOM: Seriously Underwater Properties Post Largest Yearly Drop

Ahead of the Mortgage Bankers Association’s 3rd Quarter National Delinquency Survey release this Friday, ATTOM Data Solutions, Irvine, Calif., said its quarterly analysis showed seriously underwater properties fell by nearly one million properties from the second quarter.

The company’s Q3 2017 U.S. Home Equity & Underwater Report said 4.6 million properties were seriously underwater (where the combined loan amount secured by the property was at least 25 percent higher than the property’s estimated market value), down by more than 800,000 properties from the previous quarter and down by more than 1.4 million properties from a year ago, representing the biggest year-over-year drop since Q2 2015.

Seriously underwater properties represented 8.7 percent of all U.S. properties with a mortgage, down from 9.5 percent in the previous quarter and down from 10.8 percent a year ago.

At the same time, ATTOM reported more than 14 million “equity rich” U.S. properties, where the combined loan amount secured by the property was 50 percent or less of the estimated market value of the property. This was down slightly from the previous quarter but up by 905,000 compared to a year ago. It represented 26.4 percent of all U.S. properties with a mortgage, up from 24.6 percent in the previous quarter and up from 23.4 percent a year ago.

“Accelerating home price appreciation this year is increasing the velocity at which seriously underwater homeowners are recovering home equity lost during the Great Recession,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Median home prices nationwide are up 9.4 percent so far in 2017, the fastest pace of appreciation through the first three quarters of a year since 2013. Continued home price appreciation is also helping to grow the number of equity rich homeowners across the country compared to a year ago.”

ATTOM reported states with the highest share of equity rich properties were Hawaii (41.9 percent); California (41.4 percent); New York (35.7 percent); Oregon (34.0 percent) and Washington (33.6 percent). Among 93 metropolitan statistical areas with a population of 500,000 or more, those with the highest share of equity rich properties were San Jose, Calif. (61.0 percent); San Francisco (56.4 percent); Los Angeles (45.3 percent); Honolulu (43.9 percent); and Oxnard-Thousand Oaks-Ventura, Calif. (38.7 percent).

The report said states with the highest share of seriously underwater properties were Louisiana (19.2 percent); Iowa (14.2 percent); Pennsylvania (14.0 percent); Mississippi (13.8 percent); and Alabama (13.7 percent). Metro areas with the highest share of seriously underwater properties were Baton Rouge, La. (20.5 percent); Scranton, Pa. (19.5 percent); Youngstown, Ohio (18.2 percent); New Orleans (17.4 percent); and Dayton, Ohio (16.4 percent).

MBA will release its Third Quarter National Delinquency Survey this Friday, Nov. 17.

The NDS, conducted since 1953, covers 39 million loans on one- to four- unit residential properties. Loans surveyed are reported by more than 100 lenders, including mortgage bank, commercial banks and thrifts.

MBA NewsLink and MBA Servicing NewsLink will provide coverage, with commentary from MBA Vice President of Industry Analytics Marina Walsh.