Markets & EconomyMortgage

‘Mortgage cash-out record?’ Ahem

Peeking inside the numbers behind Black Knight's cash-out release
  • In Q3 2015, 42 percent of all first lien refinances involved a cash-out component.
  • However, Black Knight has gotten caught in the infernal terminology of mortgage underwriting.

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Black Knight, the data source and consultant to mortgage servicers, reported yesterday, “In Q3 2015, 42 percent of all first lien refinances involved a cash-out component, the highest share since 2008. Likewise, the average cash-out amount -- over $60,000 -- is the highest since 2007.” Sounds reasonable. After all, the Fed reports that total home equity had crashed in 2011 to little more than half its 2006 peak, and now is higher than it started -- $12.3 trillion in total equity. By the way, about $3 trillion more than total mortgages outstanding, very good news. But little in mortgageland is reasonable. Black Knight has gotten caught in the infernal terminology of mortgage underwriting. You’d think that if you got a new “cash-out” loan, you’d get cash, right? 1. Um ... no. If you took out a 2nd mortgage after you bought, an ordinary Home Equity Line of Credit, and refinanced to include the balance in a new loan -- no net cash to you at all -- that’s a “...