tappable equity at
\nall-time high, but tax code changes could impact
\nhomeowners\u2019 utilization
\n– As of Q3 2017, approximately 42 million homeowners
\nwith a mortgage have nearly $5.4 trillion in equity
\navailable to borrow against, assuming a maximum 80%
\ntotal loan-to-value ratio
\n– Over 80% of all mortgage holders now have available
\nequity to tap via a first-lien cash-out refinance or
\nhome equity line of credit (HELOC)
\n– Under the recently passed tax reform plan, interest
\non HELOCs is no longer deductible, increasing the
\npost-tax expense of such products for those who itemize
\n– HELOCs have been an attractive option for borrowers
\nto utilize available equity without sacrificing low
\nfirst- lien interest rates; with interest on these
\nproducts no longer deductible, the value proposition
\nhas changed
\n– In many cases, for borrowers with high unpaid
\nprinc ipal balances (UPB), taking out low-dollar lines
\nof credit, the math still favors HELOCs
\n– However, for low-to-moderate UPB borrowers taking
\nout larger amounts of equity \u2013 assuming interest on
\ncash-out refinances remains deductible \u2013 the post-tax
\nmath may now favor such products instead, even if it
\nresults in a slight increase to first lien interest
\nrates<\/p>\n
The Data & Analytics division of Black Knight, Inc.
\nreleased its latest Mortgage Monitor Report, based on
\ndata as of the end of November 2017. This month, Black
\nKnight finds that tappable equity \u2013 the amount of
\nequity available for homeowners to borrow against
\nbefore reaching a maximum 80% total loan-to-value (LTV)
\nratio \u2013 is at an all-time high. However, as Black
\nKnight Data & Analytics Executive Vice President Ben
\nGraboske explained, recent changes to the US tax code
\nmay have implications for homeowners\u2019 utilization of
\nthat equity. \u201cAs of the end of Q3 2017, 42 million
\nhomeowners with a mortgage now have an aggregate of
\nnearly $5.4 trillion in equity available to borrow
\nagainst,\u201d said Graboske. \u201cThat is an all-time high, and
\nup more than $3 trillion since the bottom of the market
\nin 2012. Over 80% of all mortgage holders now have
\navailable equity to tap, whether via first-lien
\ncash-out refinances or home equity lines of credit
\n(HELOCs). We\u2019ve noted in the past that as interest
\nrates rise from historic lows, HELOCs represented an
\nincreasingly attractive option for these homeowners to
\naccess their available equity without relinquishing
\ninterest rates below today\u2019s prevailing rate on their
\nfirst-lien mortgages. However, with the recently passed
\ntax reform package, interest on these lines of credit
\nwill no longer be deductible, which increases the
\npost-tax expense of HELOCs for those who itemize. While
\nthere are obviously multiple factors to consider when
\nidentifying which method of equity extraction makes
\nmore financial sense for a given borrower, in many
\ncases, for those with high unpaid principal balances
\nwho are taking out lower line amounts, the math still
\nfavors HELOCs. However \u2013 assuming interest on cash-out
\nrefina nces remains deductible \u2013 for low-to-moderate UPB
\nborrowers taking out larger amounts of equity, the
\npost-tax math for those who will still itemize under
\nthe increased standard deduction may now favor cash-out
\nrefinances instead, even if the result is a slight
\nincrease to first-lien interest rates.<\/p>\n
\u201cAs rates continue to rise and the cost associated with
\nincreasing the rate on an entire first-lien balance
\nrises as well, the benefit pendulum will likely swing
\nback toward HELOCs. Even so, the change could certainly
\nimpact HELOC lending volumes and loan amounts in the
\ncoming months and years. To a certain degree, the same
\nquestion holds true for cash-out refinances, since tax
\ndebt for homeowners who will no longer itemize becomes
\ngenerally more expensive without mortgage interest
\ndeduction in the equation. These refinances will likely
\nbe an attractive source of secured debt in the future,
\nbut increased post-tax costs may have a negative impact
\non originations. That said, it still remains to be seen
\nwhether and to what extent tax costs will impact
\nborrower decisions in terms of either HELOCs or
\ncash-out refinances. At this point, only time will
\ntell.\u201d The increase in equity, driven by rising home
\nprices, has also continued to shrink the population of
\nunderwater borrowers who owe more on their mortgages
\nthan their homes are worth. The number of underwater
\nborrowers declined by 800,000 over the first nine
\nmonths of 2017, a 37% decline in negative equity since
\nthe start of the year. Only 2.7% of homeowners with a
\nmortgage (approximately 1.36 million borrowers) now owe
\nmore than their home is worth, the lowest such rate
\nsince 2006. Though still elevated from pre-recession
\nlevels, the negative equity rate continues to
\nnormalize. Even so, home prices in large portions of
\nthe country remain below pre-recession peaks. While 36
\nstates and 70% of Core Based Statistical Areas (CBSAs)
\nhave now surpassed pre-recession home price peaks, 43
\nof the nation\u2019s 100 largest markets still lag behind.<\/p>\n
As was reported in Black Knight\u2019s most recent First
\nLook news release, other key results include:
\n– Total US loan delinquency rate: 4.55%
\n– Month-over-month change in delinquency rate: 2.54%
\n– Total US foreclosure pre-sale inventory rate: 0.66%
\n– Month-over-month change in foreclosure pre-sale
\ninventory rate: -3.15%
\n– States with highest percentage of non-current loans:
\nMS, FL, LA, AL, WV
\n– States with lowest percentage of non-current loans:
\nMT, MN, OR, ND, CO
\n– States with highest percentage of seriously
\ndelinquent loans: MS, FL, LA, TX, AL<\/p>\n
The benchmark S&P 500 opened lower for the first time
\nin 2018 on Monday, as losses in healthcare and
\nfinancial stocks cut short Wall Street’s strongest
\nstart to a year in a decade. The S&P and the Nasdaq
\nlast week recorded its strongest first four trading
\ndays in a year since 2006, and the Dow industrials
\nposted its best since 2003. “We had a strong market in
\nthe past week, and what generally happens in the first
\nweek sets the trend for the remainder of the year. Now
\nthat it’s established, there could be some profit-
\ntaking,” said Peter Cardillo, chief market economist at
\nFirst Standard Financial in New York. At 9:41 a.m. ET,
\nthe S&P 500 was down 2.84 points, or 0.10%, at
\n2,740.31. The Dow Jones Industrial Average was down
\n31.55 points, or 0.12%, at 25,264.32, and the Nasdaq
\nComposite was down 4.19 points, or 0. 06%, at 7,132.37.
\nThe Dow and the Nasdaq still eked out record highs
\nbriefly after open. The dollar inched higher against a
\nbasket of major peers with data showing that slower US
\njobs growth did little to dent expectations for further
\ninterest rate increases this year.<\/p>\n
Capital Region totals exceed height of subprime crisis
\nA decade after the subprime mortgage crisis put
\nmillions of Americans out of their homes, dozens of
\nhouses are still falling into foreclosure each month in
\nthe Capital Region. The trend continues despite a
\nmuch-improved economy, more-careful mortgage industry
\npractices and an infrastructure of support that has
\nbeen created for borrowers facing the loss of their
\nhomes. \u201cWe have noticed that the number of foreclosures
\nhave not gone back to pre-Great Recession levels,\u201d said
\nJames Flacke, executive director of Better
\nNeighborhoods Inc., a Schenectady nonprofit that
\nprovides assistance to homeowners facing mortgage
\nforeclosure. Statistics compiled by ATTOM Data
\nSolutions show the following combined foreclosure
\ntotals for Albany, Fulton, Montgomery, Saratoga,
\nSchenectady and Schoharie counties:
\n2006: 156
\n2007: 386
\n2008: 495
\n2009: 451
\n2010: 554
\n2011: 211
\n2012: 330
\n2013: 377
\n2014: 625
\n2015: 902
\n2016: 1,056
\n2017: 777
\nThe 2017 total is for 11 months \u2014 December numbers were
\nnot yet available. The other years count all 12 months.
\nAnd the totals are only mortgage foreclosures by
\nlenders \u2014 foreclosures by municipalities for nonpayment
\nof taxes are not included.<\/p>\n
The head of another non-profit that offers housing
\ncounseling, the Affordable Housing Partnership in
\nAlbany, said the foreclosure rate never really slowed
\nafter the subprime crisis. \u201cThe basic reasons are still
\nloss of income, primarily, or health reasons, or
\ndivorce,\u201d Executive Director Susan Cotner said. \u201cThe
\nbig economic downturn crisis has passed but still
\npeople struggle with their mortgages all the time.\u201d
\nATTOM found that New York had the 10th highest rate of
\nforeclosure among the 50 states as of September: one
\nforeclosure for every 1,671 housing units. ATTOM also
\nfound that foreclosure activity of all types \u2014 default
\nnotices, repossessions and auctions \u2014 in the third
\nquarter of 2017 was at its lowest level in 11 years
\nnationwide. The Capital Region apparently has not been
\nfollowing the downward trend. There were 1,681 such
\nnotices issued in the Capital Region from Nov. 21 to
\nDec. 20, 1,500 one month earlier, and 1,528 two months
\nearlier. They had been averaging about 1,400 a month.<\/p>\n
OPEC
\nOil prices rose on Monday, coming close to new
\nthree-year highs on a slight decline in the number of
\nUS rigs drilling for new production and sustained OPEC
\noutput cuts. US West Texas Intermediate crude futures
\nhad risen to $61.94 a barrel by 1140 GMT, 50 cents
\nabove their last settlement. WTI last week reached
\n$62.21, the highest since May 2015. Brent crude futures
\nwere at $67.95 a barrel, 33 cents above their last
\nclose. Brent hit $68.27 last week, the highest since
\nMay 2015. Traders said the gains were due to a slight
\ndecline in the number of US rigs drilling for new
\nproduction. The rig count eased by five in the week to
\nJan. 5 to 742, according to data from oil services firm
\nBaker Hughes. Despite this, US production is expected
\nsoon to rise above 10 million barrels per day, largely
\nthanks to soaring output from shale drillers. Only
\nRussia and Saudi Arabia produce more.<\/p>\n
Analysts at Goldman Sachs think two issues will be the
\nsubject of reform in 2018. \u201cFirst, a few smaller issues
\nstand a good chance of enactment,\u201d said the global
\nanalytics team in an email to clients. \u201cAmong these are
\nhealth legislation that would incrementally stabilize
\nthe ACA and banking legislation that would make
\nincremental changes to the Dodd-Frank Act. So, say
\n\u201cAdios, Dodd-Frank,\u201d Goldman says the president is
\ncoming for you. Here\u2019s the rest of the prediction:
\n\u201cSecond, Congress faces new fiscal deadlines. Spending
\nauthority expires January 19 and the debt limit must be
\nraised by March. These deadlines could lead to
\nnear-term uncertainty but are also likely to lead to
\nsome additional fiscal stimulus. We expect spending
\ncaps to be lifted and a third round of disaster relief
\nfunding to be approved as part of the process.\u201d<\/p>\n
See you at the top!<\/p>\n","protected":false},"excerpt":{"rendered":"
Black Knight – Mortgage Monitor: tappable equity at all-time high, but tax code changes could impact homeowners\u2019 utilization – As of Q3 2017, approximately 42 million homeowners with a mortgage have nearly $5.4 trillion in equity available to borrow against, assuming a maximum 80% total loan-to-value ratio – Over 80% of all mortgage holders now […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[39],"tags":[222,158,226,192,53,93,224,167,225,40,207,202,223,216,221],"_links":{"self":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts\/846"}],"collection":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/comments?post=846"}],"version-history":[{"count":1,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts\/846\/revisions"}],"predecessor-version":[{"id":847,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/posts\/846\/revisions\/847"}],"wp:attachment":[{"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/media?parent=846"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/categories?post=846"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/team.simplyfreedom.ws\/index.php\/wp-json\/wp\/v2\/tags?post=846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}