by Calculated Risk on 7/10/2017 09:36:00 AM

Black Knight Financial Services (BKFS) released their Mortgage Monitor report for May today. According to BKFS, 3.79% of mortgages were delinquent in May, down from 4.25% in May 2016. BKFS also reported that 0.83% of mortgages were in the foreclosure process, down from 1.13% a year ago.

This gives a total of 4.62% delinquent or in foreclosure.

Press Release: Black Knight’s May Mortgage Monitor: Underwater Borrower Population Below Two Million for First Time Since 2006

Today, the Data and Analytics division of Black Knight Financial Services, Inc. released its latest Mortgage Monitor Report, based on data as of the end of May 2017. This month, Black Knight finds that rising home prices have both decreased the number of borrowers underwater on their mortgages while increasing the amount of tappable – or lendable – equity available to homeowners. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, continued growth in the equity landscape has also improved the net worth of many – but not all – homeowners with mortgages.

“The steady upward trajectory of home prices continues to improve the equity positions of many homeowners,” said Graboske. “This is plainly visible in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth. Over the past year, we’ve seen a 35 percent decline in the total underwater population, with a 16 percent decline in that population over the first three months of 2017 alone. Home prices rose 2.3 percent in the first quarter, as compared to 1.8 percent over the same period last year, helping an additional 350,000 borrowers regain equity in their homes. As of today, there are 1.8 million underwater borrowers remaining, the first time this population has fallen below two million since 2006.

“What stands out is the disparity we see in this improvement. As has been the case for some time now, negative equity has become more and more a localized phenomenon. But it’s also becoming concentrated among a particular class of homeowner. Nearly half of all borrowers who remain underwater own homes in the lowest 20 percent of prices in their respective markets. While the nation as a whole now has a negative equity rate of just 3.6 percent, among owners in that lowest price tier, it’s over eight percent. In fact, these lowest-price-tier properties are more than twice as likely to be underwater as those in the next price tier up, and 6.5 times more likely to be underwater than those living in the top 20 percent of the market. This is the highest differential we’ve seen between high and low price tiers since we began keeping track in 2005. In some areas, the disparity between the lowest price tier and the highest is staggering. In Detroit, for example, borrowers whose homes are in the lowest 20 percent of prices are 50 times more likely to be underwater than those in the top 20 percent.”

Rising home prices are also increasing the amount of equity available for homeowners to borrow against. Looking solely at borrowers with at least 20 percent equity in their homes, Black Knight found that total tappable (or lendable) equity increased by $695 billion dollars over the last year.
emphasis added

Click on graph for larger image.

This graph from Black Knight shows the number of mortgage holders with negative equity over time.

From Black Knight:

• The steady upward trajectory of home prices – as well as ongoing foreclosure activity – has helped to consistently reduce the nation’s total number of underwater borrowers

• Over the past year, we’ve seen a 35 percent decline in the underwater population, with a 16 percent decline over the first three months of 2017 alone

• Home prices rose 2.3 percent in the first quarter, as compared to 1.8 percent over the same period last year, helping an additional 350K borrowers regain equity in their homes

• As of today, there are 1.8 million underwater borrowers remaining, the first time this population has fallen below 2M since 2006

• Negative equity is still well above 2005 levels, at the end of which only 750K borrowers owed more than their homes were worth

There is much more in the mortgage monitor.