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Partnership Streamlines Home Equity Loan Valuations

CoreLogic has integrated its OnSite property condition reports on the Ellie Mae Encompass all-in-one mortgage management solution. OnSite is a property condition report coupled with local market conditions and patent-pending features that are specifically designed to help institutions meet the Federal requirements when an Automated Valuation Model (AVM) is used for mortgage lending purposes.


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“Organizations are always looking for ways to improve efficiencies during the valuations process, particularly during the home equity lending process,” said Jonathan Nutting, senior leader, Valuation Operations, for CoreLogic. “As the first integration of its kind on Encompass, users will now be able to easily incorporate this solution into their existing workflows, saving them time and money in instances where an appraisal is not necessary.”


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OnSite is designed to help lenders comply with federal guidelines surrounding the verification of the physical condition of a property. In some home equity lending situations, OnSite can be leveraged with an AVM in lieu of an appraisal. All Onsite reports use a patent-pending algorithm to create an objective overall condition rating that supports the lender’s valuations processes.


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This integration also allows users to access OnSite Plus – a property condition report for situations where a licensed real estate broker or agent is required to gain access to a property, or when a local expert is needed.


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OnSite joins 15 other CoreLogic products currently integrated in the Encompass platform, including CondoSafe condo lending solutions, Instant Merge – the nation’s most popular 3-bureau merged credit reporting solution, flood determinations, Property Tax Estimator, LoanSafe Fraud Manager, LoanSafe Risk Manager, appraisal management services via Mercury Network, Merge Plus credit supplements, 4506-T Direct, FinalCheck LQI Compliance, automated valuation models, SSN Verification and several services within the Ellie Mae Total Quality Loan.

CoreLogic is a property information, analytics and data-enabled solutions provider. The company’s combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services.

Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific.

Total Tappable Equity Falls For First Time Since Housing Recovery Began

The Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based on data as of the end of October 2018. This month, Black Knight looked at full Q3 2018 data to revisit the U.S. home equity landscape, finding that quarterly declines were seen in both total equity and tappable equity, the amount available for homeowners with mortgages to borrow against before hitting a maximum 80 percent combined loan-to-value (LTV) ratio. Ben Graboske, executive vice president of Black Knight’s Data & Analytics division, explained that the decline is being driven by home prices pulling back on a quarterly basis in some of the nation’s most expensive housing markets.


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“After seeing a significant slowdown in its growth from the first to second quarters of 2018, the amount of tappable equity fell by $140 billion in Q3 2018,” said Graboske. “That is the first decline we’ve seen since the housing recovery began, and its cause can be traced directly to softening home prices in some of the nation’s most expensive – and equity- rich – markets. Indeed, tappable equity fell in 60 of the 100 largest markets, including 12 of the top 15. Three markets in California alone – San Jose, San Francisco and Los Angeles – accounted for 55 percent of the total net decline. Add Seattle into the mix, and you see that just four markets were behind two-thirds of the net reduction in tappable equity. All were areas where home price growth has far outpaced the national average in recent years, but in which prices fell in Q3 2018 – from as little as one percent in Los Angeles, to a 4.6 percent drop in San Jose.


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“Of course, there is still $9.8 trillion in total home equity in the market, some $5.9 trillion of which is tappable. That’s $571 billion more than in Q3 2017, and tappable equity remains near an all-time high. It’s also important to remember that in general third quarters are relatively flat as far as home prices are concerned, and that tappable equity is up on an annual basis in 98 percent of major metro areas. But the fact remains that affordability concerns are beginning to have an impact on home prices, particularly in more expensive markets, and as a result, on homeowner equity as well.


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Interestingly enough – although for-sale inventory is up on an annual basis for the first time in four years – an analysis of listings on mortgaged properties suggests that homeowners reluctant to put their current homes on the market due to ‘rate lock’ or ‘affordability lock’ may still be holding down available inventory by about six percent. By constraining the supply of available homes, this in turn may be countering what might otherwise be greater downward pressure on home prices.”

Other results from the quarterly equity data showed that just 1.8 percent of homeowners remain underwater, owing more on their mortgages than their homes are worth. For those with equity, the average homeowner with a mortgage has $191,000 in equity in his or her home. Among those with tappable equity, the average amount available to borrow against is $136,000. In total, over 50 million homeowners with mortgages have some amount of equity in their home, 43.6 million of which have tappable equity – a decline of approximately 272,000 from this time last year.

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Equity Rich Properties Represent 25.7% Of U.S. Properties

ATTOM Data Solutions released its Q3 2018 U.S. Home Equity & Underwater Report, which shows that in the third quarter of 2018, nearly 14.5 million U.S. properties were equity rich — where the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value — up by more than 433,000 from a year ago to a new high as far back as data is available, Q4 2013.


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The 14.5 million equity rich properties in Q3 2018 represented 25.7 percent of all properties with a mortgage, up from 24.9 percent in the previous quarter but down from 26.4 percent in Q3 2017.


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The report also shows more than 4.9 million U.S. properties were seriously underwater — where the combined estimated balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value, representing 8.8 percent of all U.S. properties with a mortgage. That 8.8 percent share of seriously underwater homes was down from 9.3 percent in the previous quarter but still up from 8.7 percent in Q3 2017.


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“As homeowners stay put longer, they continue to build more equity in their homes despite the recent slowing in rates of home price appreciation,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “West coast markets along with New York have the highest share of equity rich homeowners while markets in the Mississippi Valley and Rust Belt continue to have stubbornly high rates of seriously underwater homeowners when it comes to home equity.”

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Home Equity Growth Slows

Data shows that at the end of the first quarter of 2018, more than 5.2 million (5,206,446) U.S. properties were seriously underwater (where the combined balance of loans secured by the property was at least 25 percent higher than the property’s estimated market value), down by more than 291,000 properties from a year ago — the smallest year-over-year drop since ATTOM Data Solutions began tracking in Q1 2013.

The 5.2 million seriously underwater properties at the end of Q1 2018 represented 9.5 percent of all U.S. properties with a mortgage, up from 9.3 percent in the previous quarter but down from 9.7 percent in Q1 2017.

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“We’ve reached a tipping point in this housing boom where enough homeowners have regained both sufficient equity and sufficient confidence to tap into their home equity — resulting in a noticeably slower decline in seriously underwater properties and slower growth in equity rich properties,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “This tapping of equity could take the form of a cash-out refinance, home equity loan or simply a home sale. We saw the biggest quarterly drop in average homeownership tenure for homeowners who sold in the first quarter since Q4 2008, evidence that more homeowners are reaching that equity-tapping tipping point more quickly and deciding to sell.”

More than 19.5 million (19,513,871) U.S. properties had between 20 and 50 percent equity (LTV of between 80 and 50 percent) at the end of Q1 2018, down by 1,714,099 from a year ago, an 8 percent decrease.

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Homes with 20 to 50 percent equity represented 36.1 percent of all properties with a mortgage as of the end of Q1 2018, down from 36.3 percent in the previous quarter and down from 37.6 percent in Q1 2017.

Equity rich properties represent one in four properties with a mortgage

More than 13.8 million (13,841,082) U.S. properties with a mortgage were equity rich at the end of Q1 2018, up by more than 122,000 from a year ago but still down from a peak of more than 14 million equity rich properties in Q2 2017.

The 13.8 million equity rich properties represented 25.3 percent of all U.S. properties with a mortgage, down from 25.4 percent in the previous quarter but still up from 24.3 percent in Q1 2017.

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Highest share of equity rich properties in coastal California, Honolulu, Seattle

States with the highest share of equity rich homes were Hawaii (41.6 percent); California (41.5 percent); New York (34.8 percent); Washington (33.1 percent); and Oregon (31.8 percent).

Among 98 metropolitan statistical areas with a population of at least 500,000, those with the highest share of equity rich homes were San Jose, California (66.1 percent); San Francisco, California (56.0 percent); Los Angeles, California (45.4 percent); Honolulu, Hawaii (43.1 percent); and Seattle, Washington (39.1 percent).

Highest share of seriously underwater properties in Scranton, Baton Rouge, Youngstown

States with the highest share of seriously underwater homes at the end of Q1 2018 were Louisiana (20.1 percent); Mississippi (18.0 percent); Iowa (17.2 percent); West Virginia (15.9 percent); and Illinois (15.9 percent).

Among 98 metropolitan statistical areas with a population of at least 500,000, those with the highest share of seriously underwater homes at the end of Q1 2018 were Scranton, Pennsylvania (21.9 percent); Baton Rouge, Louisiana (19.9 percent); Youngstown, Ohio (19.5 percent); New Orleans, Louisiana (18.5 percent); and Toledo, Ohio (18.0 percent).

Along with New Orleans, among 51 metro areas with at least 1 million people, those with more than 13 percent of seriously underwater properties were Cleveland, Ohio (16.5 percent); Milwaukee, Wisconsin (16.0 percent); St. Louis, Missouri (14.7 percent); Chicago, Illinois (13.8 percent); Detroit, Michigan (13.6 percent); Virginia Beach, Virginia (13.4 percent); and Kansas City, Missouri (13.4 percent).

Home Equity Is On The Rise

Industry dynamics are improving in some areas. For example, this month Black Knight revisited the nation’s equity landscape, finding that as home prices continued to increase so has the amount of tappable, or lendable, equity available to Americans with mortgages. Black Knight defines tappable equity as the total amount of equity a homeowner with a mortgage has available to borrow against before reaching a maximum loan-to-value ratio (LTV) of 80 percent. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, rising home prices have pushed the total amount of such equity to a record high.

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“As home prices continued their upward trajectory at the national level, the amount of tappable equity available to homeowners with mortgages continued to rise as well,” said Graboske. “Tappable equity rose by $735 billion over the course of 2017, the largest calendar year increase by dollar value on record. At $5.4 trillion, total tappable equity is also the highest on record and 10 percent above the previous, pre-recession peak in 2005. An estimated $262 billion in tappable equity was withdrawn in 2017 via cash-out refinances and home equity lines of credit (HELOCs), also reaching a new post-recession peak. Still, Americans seem more reserved in tapping their equity than in years past, withdrawing less than 1.25 percent of all tappable equity available in Q4 2017 – a four-year low. Of that total, 55 percent was tapped via HELOCs, the second lowest such share since the housing recovery began. However, as interest rates rise, it is likely that we will see the HELOC share of equity withdrawals increase as well.

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“At the start of 2018, some 55 percent of all tappable equity was held by borrowers with first-lien interest rates below the going 30-year rate. Following the nearly 50 basis points rise in interest rates we’ve seen since the start of the year, that share has ballooned to 75 percent. While rising rates tend to dampen utilization of equity in general, the market is poised for a strong shift toward HELOCs, as they allow borrowers to take advantage of growing equity while holding on to historically low first-lien interest rates. Over half of all tappable equity – approximately $2.8 trillion – is held by borrowers with credit scores of 760 or higher and first-lien interest rates below today’s prevailing rate, which creates a large pocket of low-risk HELOC candidates.”

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The data also showed that risk remains relatively low among cash-out refinance originations as well. The average cash-out refinance borrower in 2017 had an average credit score of 744 (down from 750 in 2016) and pulled $68,000 in equity (up from $64,000) with a resulting loan-to-value ratio (LTV) of 66 percent. Approximately 40 percent of remaining cash-out refinance candidates – those borrowers with both tappable equity and current first-lien rates of 4.5 percent or higher – have credit scores above 760. As borrowers with higher credit scores tend to have higher average equity amounts, approximately 50 percent of all tappable equity among borrowers with first-lien rates of 4.5 percent or higher is held by that group.

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Fulton Financial Embraces New Home Equity Lending Report System

Fulton Financial Corp. has migrated to the new, FirstClose Report system to provide Fulton Financial access to the full refinance and home equity lending technology solution and vendor management system.

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Fulton Financial, a Lancaster, Pa.-based financial holding company offering investment management, trust services and residential mortgage lending, has utilized FirstClose’s a la carte, legacy services since 2009, and recently completed a full migration in order to access the full-service, all-inclusive FirstClose Report.

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Now, Fulton Financial is able to receive comprehensive refinance and home equity loan reports including title, flood, valuation and other important data elements in one file. The new system also provides a number of automations that are not available in the old system and should increase efficiency and help reduce turn-times.

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“We have been extremely pleased with the services we have been receiving from FirstClose, and are looking forward to a continued partnership in which we are able to utilize even more loan report amenities,” said Khanh Dang, senior retail credit operations manager at Fulton Financial.

“Our goal is always to help our customers improve their efficiencies while saving them money,” said Tim Smith, co-founder and president of FirstClose. “Now, Fulton Financial is able to streamline their reporting processes with the FirstClose Report, saving the company both time and money in the long run.”

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Home Equity Grows By $170.7B For Homeowners 62 And Older

The National Reverse Mortgage Lenders Association reports that retirement-aged homeowners saw a combined 2.8 percent increase of $170.7 billion in home equity in the fourth quarter of 2016, boosting their total housing wealth to $6.2 trillion.

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A 2.4 percent increase in home values for owners 62 and older in Q4 2016 drove the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) to 221.75, an all-time high since the index was first published in 2000. On a year-over-year basis, the RMMI index rose by 9.0 percent in 2016, compared to an increase of 8.6 percent in 2015 and 8.0 percent in 2014.

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“The strong RMMI in the fourth quarter of last year shows that home equity continues to be a valuable asset for homeowners 62 and older,” said NRMLA President and CEO Peter Bell. “It’s time for consumers to study what it means to have home equity and to learn about its strategic uses, including how it can be used to support retirement goals.”

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Research released from the National Council on Aging and a new Issue in Brief from the Center for Retirement Research at Boston College show that home equity has gone largely underutilized by older homeowners who have been unwilling to consider housing wealth as a resource for retirement funding. NCOA and CRR both show that limited awareness and knowledge of home equity tools contribute to the low take-up of financial products, such as reverse mortgages.

To help explain home equity and its uses, NRMLA recently released its “Learn About Home Equity” infographic, and the three-part article, “An Introduction to Housing Wealth: What is home equity and how can it be used?,” which are available on NRMLA’s consumer education website www.reversemortgage.org/HomeEquity.

1 Million Borrowers Regained Equity Last Year

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CoreLogic released a new analysis showing that U.S. homeowners with mortgages (roughly 63 percent of all homeowners) saw their equity increase by a total of $783 billion in 2016, an increase of 11.7 percent. Additionally, just over 1 million borrowers moved out of negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8 percent of all mortgaged properties, or approximately 48 million homes.

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In Q4 2016, the total number of mortgaged residential properties with negative equity stood at 3.17 million, or 6.2 percent of all homes with a mortgage. This is a decrease of 2 percent quarter over quarter from 3.23 million homes, or 6.3 percent of all mortgaged properties, in Q3 2016 and a decrease of 25 percent year over year from 4.23 million homes, or 8.4 percent of all mortgaged properties, compared with Q4 2015.

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Negative equity, often referred to as being “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or both.

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Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009.

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The national aggregate value of negative equity was approximately $283 billion at the end of Q4 2016, down quarter over quarter by approximately $700 million, or 0.3 percent, from $283.7 billion in Q3 2016; and down year over year by approximately $26 billion, or 8.4 percent, from $308.9 billion in Q4 2015.

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“Average home equity rose by $13,700 for U.S. homeowners during 2016,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The equity build-up has been supported by home-price growth and paydown of principal. The CoreLogic Home Price Index for the U.S. rose 6.3 percent over the year ending December 2016. Further, about one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.”

“Home equity gains were strongest in faster-appreciating and higher-priced home markets,” said Frank Martell, president and CEO of CoreLogic. “The states with the largest home-price appreciation last year, according to the CoreLogic Home Price Index, were Washington and Oregon at 10.2 percent and 10.3 percent, respectively, with average homeowner equity gains of $31,000 and $27,000, respectively. This is double the pace for the U.S. as a whole. And while statewide home-price appreciation was slower in California at 5.8 percent, the high price of housing there led to California homeowners gaining an average of $26,000 in home equity wealth last year.”

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Homes Are Gaining Equity Again

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ATTOM Data Solutions released its Year-End 2016 U.S. Home Equity & Underwater Report, which shows that as of the end of 2016 there were 5.4 million (5,408,323) U.S. properties seriously underwater — where the combined loan amount secured by the property was at least 25 percent higher than the property’s estimated market value — a decrease of more than 1 million properties (1,028,058) from a year ago.

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The 5.4 million seriously underwater properties at the end of 2016 represented 9.6 percent of all U.S. properties with a mortgage, down from 10.8 percent at the end of Q3 2016 and down from 11.5 percent at the end of 2015 to the lowest level since ATTOM Data Solutions began tracking in Q1 2012.

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The report is based on publicly recorded mortgage and deed of trust data collected and licensed by ATTOM Data Solutions nationwide along with an industry standard automated valuation model (AVM) updated monthly in the ATTOM Data Warehouse of more than 150 million U.S. properties.

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“Since home prices bottomed out nationwide in the first quarter of 2012, the number of seriously underwater U.S. homeowners has decreased by about 7.1 million, an average decrease of about 1.4 million each year,” said Daren Blomquist, senior vice president with ATTOM Data Solutions. “Meanwhile, the number of equity rich homeowners has increased by nearly 4.8 million over the past three years, a rate of about 1.6 million each year.

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“Despite this upward trend over the past five years, the massive loss of home equity during the housing crisis forced many homeowners to stay in their homes longer before selling, effectively disrupting the historical domino effect of move-up buyers that feeds both demand for new homes and supply of inventory for first-time homebuyers,” Blomquist noted. “Between 2000 and 2008, our data shows the average homeownership tenure nationwide was 4.26 years, but that average tenure has been trending steadily higher since 2009, reaching a new record high of 7.88 years for homeowners who sold in 2016.”

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Home Equity Rises Over $700 Billion In The Third Quarter

CoreLogic released a new analysis showing that U.S. homeowners with mortgages (roughly 63 percent of all homeowners) saw their equity increase by a total of $227 billion in Q3 2016 compared with the previous quarter, an increase of 3.1 percent. Additionally, 384,000 borrowers moved out of negative equity, increasing the percentage of homes with positive equity to 93.7 percent of all mortgaged properties, or approximately 47.9 million homes. Year over year, home equity grew by $726 billion, representing an increase of 10.8 percent in Q3 2016 compared with Q3 2015.

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In Q3 2016, the total number of mortgaged residential properties with negative equity stood at 3.2 million, or 6.3 percent of all homes with a mortgage. This is a decrease of 10.7 percent quarter over quarter from 3.6 million homes, or 7.1 percent of mortgaged properties, in Q2 2016 and a decrease of 24.1 percent year over year from 4.2 million homes, or 8.4 percent of mortgaged properties, in Q3 2015.

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Negative equity, often referred to as “underwater” or “upside down,” applies to borrowers who owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in home value, an increase in mortgage debt or a combination of both.

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Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009, based on CoreLogic negative equity data, which goes back to Q3 2009.

The national aggregate value of negative equity was about $282 billion at the end of Q3 2016, decreasing approximately $2.1 billion, or 0.8 percent, from $284 billion in Q2 2016, and decreasing year over year about $25 billion, or 8.2 percent, from nearly $307 billion in Q3 2015.

“Home equity rose by $12,500 for the average homeowner over the last four quarters,” said Dr. Frank Nothaft, chief economist for CoreLogic. “There was wide geographic variation with homeowners in California, Oregon and Washington gaining an average of at least $25,000 in home equity wealth, while owners in Alaska, North Dakota and Connecticut had small declines, on average.”

“Price appreciation is the main ingredient for home equity wealth creation, and home prices rose 5.8 percent in the year ending September 2016 according to the CoreLogic Home Price Index,” said Anand Nallathambi, president and CEO of CoreLogic. “Paydown of principal is the second key component of equity building. Many homeowners have refinanced into shorter-term loans, such as a 15-year loan, and by doing so, they have significantly fewer mortgage payments and are able to build equity wealth faster.”