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Outlook still bleak for underwater borrowers

BY Brae Canlen

CoreLogic, a provider of information, analytics and business services, has released data showing that 10.7 million, or 22.1%, of all residential properties with a mortgage were in negative equity at the end of the third quarter of 2011. This is down slightly from 10.9 million properties, or 22.5%, in the second quarter. 

An additional 2.4 million borrowers had less than 5% equity, referred to as near-negative equity, in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 27.1% of all residential properties with a mortgage nationwide in the third quarter, down from 27.5% in the previous quarter.

Nevada has the highest negative equity percentage with 58% of all of its mortgaged properties underwater, followed by Arizona (47%), Florida (44%), Michigan (35%) and Georgia (30%). This is the first quarter that Georgia entered the top five, surpassing California, which had been in the top five since tracking began in 2009.

Some other highlights from the study:

• There are nearly 22 million borrowers, or 45% of all borrowers, who have mortgages with an 80% or more loan-to-value (LTV) ratio, and 69% of those mortgages have above-market interest rates of 5% or more. Borrowers with above-average LTV ratios often find it hard to qualify for today’s historically low interest rates, CoreLogic noted.

• Of the 10.7 million borrowers in negative equity, there are 6.3 million first liens without home equity loans that have an average mortgage balance of $222,000. They are underwater by an average of $52,000. The remaining 4.4 million negative equity borrowers hold first liens and home equity loans with an average mortgage balance of $309,000. These borrowers are underwater by an average of $84,000.

There are 8.6 million conventional loans in a negative equity position that have an average mortgage balance of $272,000 and are underwater by an average of $70,000.

There are 1.5 million FHA loans in a negative equity position that have an average mortgage balance of $170,000 and are underwater by an average of $26,000.

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Consumer confidence heads in the right direction

BY Ken Clark

The Conference Board reported Tuesday morning that its Consumer Confidence Index increased to 56.0 in November, up from 40.9 in October.

That’s not the only metric improving. The Expectations Index rose to 67.8 from 50.0, and the Present Situation Index increased to 38.3 from 27.1. 

It’s certainly not partying like 1985 — when the Index was set at 100. But it’s an improvement welcomed by Lynn Franco, director of The Conference Board Consumer Research Center. 

"Confidence has bounced back to levels last seen during the summer (July 2011, 59.2)," Franco said. "Consumers’ assessment of current conditions finally improved, after six months of steady declines. Consumers’ apprehension regarding the short-term outlook for business conditions, jobs and income prospects eased considerably. Consumers appear to be entering the holiday season in better spirits, though overall readings remain historically weak."

The November confidence metric of 56.0 was also ahead of November 2010, when the index stood at 54.3.

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CertainTeed and Saint-Gobain offer green grant

BY HBSDealer Staff

As part of the kickoff event of a home renovation and youth education project, Saint-Gobain and CertainTeed presented YouthBuild Schenectady with a $100,000 grant in support of the organization’s green building education and job-training program for low-income youth.

The project is part of a three-year national partnership between Saint-Gobain, CertainTeed and YouthBuild USA in support of the organization’s national green building and job training program for out-of-work, out-of-school youth. In YouthBuild programs, low-income young adults ages 16 to 24 work full time for six to 12 months toward their GEDs, high school diplomas or professional credentials while learning green construction skills by building affordable housing in their communities. 

“We are proud to partner with YouthBuild USA and stand behind the organization because of its focus on sustainability and commitment to shaping young adults to be stewards of the environment,” said John Crowe, president and CEO of Saint-Gobain and CertainTeed. “With over 1,000 employees in New York, we believe it is important to invest in the future work force and contribute to helping prepare young adults with the necessary skills they will need to be successful.”

The partnership also supports green home renovation projects in three other communities where Saint-Gobain has business concentrations: YouthBuild Philadelphia Charter School (Philadelphia, Pa.), YouthBuild Akron Summit (Akron, Ohio) and YouthBuild Worcester (Worcester, Mass.).

Upon completion, the sustainable single-family home designed by Re4orm Architecture will seek LEED certification. It will then be sold to a family of low or moderate income that has fulfilled eligibility requirements and completed a HUD-approved homeownership counseling program.

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