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Mortgage Investor Equity Positions Improve

During the first quarter, the collective ratio of loan balances to property values improved — giving mortgage investors a safer position based on homeowner equity.

U.S. mortgage borrowers
collectively owed $9.110 trillion in first and second liens as of the first quarter 2016, expanding from $9.062 trillion three months earlier.

The growth in mortgage debt outstanding was more dramatic compared to the same quarter 12 months earlier, when there were $8.841 trillion in residential loans.

CoreLogic Inc. detailed the data in its
Equity Report First Quarter 2016.

On top of the debt, residential borrowers had $6.907 trillion in net homeowner equity as of the most-recent period, gaining from the prior period’s $6.612 trillion and the year-earlier’s $6.145 trillion.

As of the first quarter of this year, 8.0 percent of U.S. borrowers owed more than their houses were worth. The negative-equity share was cut from 8.5 percent three months earlier and 10.3 percent one year earlier.

The amount of negative equity was $299.5 billion as of this year’s initial quarter.

Negative equity was worst in Nevada, where 17.5 percent of borrowers
were under water. Florida followed at 15.0 percent, then Illinois’ 14.4 percent, Rhode Island’s 13.3 percent and Maryland’s 12.9 percent.

In Texas, 98.1 percent of borrowers had positive equity — the biggest share of any state. Also above 97 percent were Alaska, Hawaii, Colorado and Washington.

The average U.S. loan-to-value ratio was 56.9 percent as of the first quarter of this year.

It was the lowest average LTV since at least the fourth-quarter 2010, the oldest data maintained by Mortgage Daily, when the average was 74.6 percent.

The trend certainly gives mortgage investors a little breathing room, providing a bigger cushion in case of loan defaults — though even defaults have been consistently on the decline.

LTVs
averaged 57.8 percent in the fourth-quarter 2015 and 59.0 percent in the first-quarter 2015.

The average LTV ratio during the first quarter of this year was just 43.2 percent in Hawaii — the lowest in the nation.

LTV ratios averaged 45.2 percent in New York, 49.0 percent in California, 52.9 percent in Washington and 53.0 percent in the District of Columbia.

At 70.5 percent, Arkansas had the highest average LTV ratio.

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