Home-Equity Assets Decline

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The amount of home-equity assets owned by lenders has fallen, but so has the volume of seriously delinquent loans.

From Jan. 1 through Sept. 30, $96.3 billion in home finance assets have been written off by residential lenders.

Compared to the same nine months in 2012, the amount written off has fallen more than 22 percent.

The data was discussed in the National Consumer Credit Trends Report from Equifax.

The latest period represents the lowest level of write offs in six years.

“Improvements in labor markets and rising home values are pushing down mortgage delinquency rates and the outlook is very positive for continued improvement,” Equifax Chief Economist Amy Crews Cutts said in the report.

Cutts noted that transitions to more severe levels of delinquency are slowing, but transition rates from the foreclosure process to repossession is accelerating — reflecting reductions in timelines in judicial foreclosure states.

On just first mortgages, real-estate-owned rates in September declined 28 percent from a year earlier to 1.71 percent — a five-year low. 

In addition, 90-day delinquent first mortgages fell below $300 billion for the first time in five years. Severely delinquent first mortgages were down more than 29 percent from September 2012. Equifax said that loans originated between 2005 and 2007 accounted for nearly two-third of seriously delinquent first mortgages.

Equifax reported that fewer than 4 million home-equity loans were outstanding for $136.2 billion as of Sept. 30, down 3.9 percent from a year prior. The number of HELs was the lowest in five years.

HELs in foreclosure rose 15.5 percent from August to $450 billion, though seriously delinquent HELs dropped 8.4 percent to $4.0 billion.

On home-equity lines of credit, new credit through July reached a four-year high of $46 billion. The 577,800 new HELOCs opened through July was up 17 percent from the same period in 2012.

However, 10.5 million HELOCs were outstanding for $497.2 billion as of Sept. 30, down 7.3 percent from the same point last year to a five-year low.

Severely delinquent HELOCs dropped 24 percent from a year earlier to $8.5 billion as of last month. The 2005, 2006 and 2007 vintages accounted for 72 percent of HELOCs that were at least 90 days past due.

Mortgage Expert

Mortgage Daily Staff