Equifax’s latest National Consumer Credit Trends Report shows rising home values and a sense that the recovery is taking hold helped drive down the June balance of
The total balance of first-mortgage loans 90 days past due or in foreclosure was $325 billion in June, down more than 27% year-over-year from $450 billion in 2012.
Similarly, the volume of loans that completed the foreclosure process and transitioned to bank-owned property “or other severe derogatory status” decreased more than 19%, from $16.7 billion in June 2012 to $13.5 billion in June 2013.
The housing market recovery is really gaining momentum, says Equifax’s chief economist Amy Crews Cutts. Improving home values are helping “more homeowners to transition into positive or near-positive equity territory” represent an additional incentive for homeowners to avoid default on their mortgage loans.
At $21.7 billion of total severely delinquent first-mortgage balances, the report finds, loans opened in 2010 and later represent only 7%.
Meanwhile, the total balance of first mortgages in foreclosure in June decreased 38% from same time a year ago reaching $105 billion, a five-year low.
In June, the total balance of severely delinquent home equity revolving loans including foreclosures also dropped more than 31% to $8.8 billion, a five-year low and a year-over-year, while the total balance of severely delinquent home equity installment loans including foreclosures was $4.3 billion, a year-over-year decrease of more than 28%.
According to Cutts, improvements, which mean a larger number of homeowners will be able to sell their homes instead of being forced to negotiate a short sale “or move to take a new job without worrying how they can afford to pay for two homes,” will continue.
