Positive equity is not a barrier to foreclosure | Pound Ridge Real Estate

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Although rising home prices have pushed many homeowners out of negative equity, escalating values are not a panacea for all distressed borrowers.

A growing percentage of borrowers are now entering foreclosure with positive equity in their homes, a new report from Fitch Ratings claims.

According to the study, the percentage of borrowers entering this process with equity has roughly doubled in the last two years.

While equity continues to play a significant role in borrower payment behavior, income and the ability-to-pay also remain key factors.

In September 2013, RealtyTrac discovered that 24% of all homeowners who are in some stage of foreclosure have at least some positive equity built up. By December 2013, that number continued to rise and 31% of people in the foreclosure process were struggling despite the presence of positive equity.

"One of the things that stood out is that the percentage of homeowners in foreclosure who have positive equity is increasing," said Daren Blomquist, vice president at RealtyTrac. "That was even more surprising because that equity is a lifeline that homeowners can use to avoid foreclosure."



http://www.housingwire.com/articles/28749-when-rising-homes-prices-are-not-enough

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