Risky home loan applications are on the decline, indicating that the frenzied phase of the current real estate cycle has passed in most regional markets, a consumer Web site reported.

Lenders review home loan applications as a safeguard against potential market risk, and those reviews have helped collateral risk decline by 28 percent during the last year, according to HomeSmartReports.com, which provides consumers online access to sales trends and property value estimates.

The decline was strongest in Washington D.C., Ohio and Nevada.

The only states currently seeing an uptick in risky loan applications are Nebraska, South Dakota, Vermont, Arizona and Idaho, the Web site reported.

“The sense of urgency among potential buyers and those who want to refinance appears to have passed in most markets. When a market is hot there’s always a rambunctious phase where sellers try to game the peak, buyers stretch to get in before it’s too late, and homeowners try to lock in equity gains with new home loans,” said Mike Ela, HomeSmartReports.com president.

“That sets the stage for market turbulence and risk. Lenders have access to measures of this turbulence and risk, and adjust their scrutiny of loan applications accordingly. We’ve started providing this information to consumers,” he said.

HomeSmartReports.com provide consumers with technical information, including risk data, that until now has only been available to real estate industry professionals. “Consumers need to know what the pros know,” Ela said.

Risk and trend information is generated as an index and incorporates changes in default and flipping activity, sales trends, value changes, neighborhood and borrower characteristics.

While risk levels in most markets are on the decline, there are still wide regional differences. Risk levels are highest in Ohio, Tennessee, Georgia and Colorado, and are lowest in New Hampshire, Rhode Island, Hawaii and Massachusetts.


Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top
Announcing Inman Connect Now, our first fully digital event.Get Tickets×