In April, the Federal Housing Finance Agency unveiled a new mortgage modification program to offer homeowners who are seriously underwater on their housing payments the opportunity to swim their way out and avoid foreclosure.

  • Dallas, Austin, Denver, Albuquerque and Provo saw the largest increase in equity rich homeowners.
  • Philadelphia, New York and Chicago were among the metros with the largest share of homeowners who qualify for the FHFA program.
  • To qualify, homeowners must occupy their homes, be 90 days delinquent, have an unpaid principal of at least $250,000 and must have a loan-to-value ratio of at least 115 percent after capitalization.

In April, the Federal Housing Finance Agency unveiled a new mortgage modification program to offer homeowners who are seriously underwater on their housing payments the opportunity to swim their way out and avoid foreclosure.

According to the FHFA, homeowners eligible for the program must own and occupy their homes, be 90 days delinquent, have an unpaid principal of at least $250,000 and must have a loan-to-value ratio of at least 115 percent after capitalization.

With all of these factors considered, less than 1 percent of all seriously underwater homes actually qualify, according to the RealtyTrac Q1 2016 U.S. Home Equity and Underwater Report, which named Dallas, Austin, Denver, Albuquerque and Provo as metros with the largest increase in equity rich homeowners.

“This new principal reduction program is designed to reach a highly targeted group of borrowers, so it’s not surprising that the share of seriously underwater borrowers who potentially qualify is razor-thin,” Daren Blomquist, senior vice president at RealtyTrac, said in a statement.

Overall, the number of seriously underwater homes decreased by 638,000 over the past year, and equity right properties increased by nearly 1.3 million.

home_equity_trends_q1_2016

The report found that New Jersey has the largest pool of homeowners who qualify for the loan modification program at 2.56 percent. Following just behind is Illinois (1.07 percent); Florida (0.67 percent); Pennsylvania (0.64 percent); Ohio (0.60 percent); New York (0.60 percent); Massachusetts (0.58 percent); Nevada (0.54 percent); and Wisconsin (0.54 percent).

The metros with the highest share of seriously underwater homes that would qualify for the program included Philadelphia (1.65 percent); New York City (1.20 percent); and Chicago (1.14 percent).

However, the states with the highest shares of underwater properties overall was a bit different. Illinois, Ohio and Florida made both lists, but Nevada and Michigan both have a high share of underwater properties — but not those that would qualify for the loan modification program. Breaking it down by city, none of the same metros were on both lists.

Seriously delinquent homes are less frequent

At the end of the first quarter of 2016, there were more than 6.7 million properties seriously underwater in the nation, which is about 12 percent of all properties with a mortgage.

This figure is down from a year ago, when 13.2 percent, or 7.3 million properties, were seriously delinquent. The peak of seriously underwater homes was 12.8 million, or 28.6 percent of properties in the second quarter of 2012.

The highest share of equity rich homeowners are in Hawaii, California, New York and Maine. Of the metros with the highest share of equity rich homeowners, Portland was the only one that wasn’t in a state on the list. San Jose, San Francisco, Honolulu and Los Angeles made the list.

Email Kimberly Manning

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