In the past few years, terms have come into common use that were uncommon before. Included among them would be “shovel-ready” — used to describe government infrastructure projects just waiting for stimulus funds to be approved. Another might be “zombie” anything — zombie mortgages, zombie foreclosures. Yet one more was “underwater homes.”
These days, the number of homes with underwater mortgages in Arkansas is a lot lower than it used to be. In fact, the number of all homes in foreclosure is down generally because of the economic rebound, as mediocre as it seems to be.
But one interesting aspect of the turnaround that’s being reported is that there are a growing number of homes in foreclosure that are actually above water. That is, they are actually worth more than what is owed on the mortgage. They enjoy “positive equity.”
According to mortgage research firm RealtyTrac, some 35 percent of the homes in foreclosure in the first quarter of this year were above water. That compares with 31 percent in the fourth quarter of 2013 and 24 percent in the third quarter. All of the homes counted are at some point between default on the mortgage, and actual bank repossession.
As is often the case with such things, RealtyTrac suggests the reason has to do with timing. Foreclosures take time to process, sometimes a year or several. It depends a lot on the requirements of state law. RealtyTrac says a lot of the homes might have been underwater to start with, but have values in the plus column because of the recovery.
What may be the saddest aspect of this phenomenon is that many owners of the homes may not know their current status. RealtyTrac says a lot homes in foreclosure are always vacant, but it says it hasn’t performed a cross-reference the current figures to see how many of the current homes with equity are now empty.
Financial conditions can shift suddenly. They can leave a person in a lurch and unaware of what their options may be for protecting valued possessions. To get that education, consulting an attorney is always advised.
Source: The Washington Post, “More homeowners no longer need to be in foreclosure, and they may not even know it,” Dina Elboghdady, April 18, 2014