Minnesota has seen some business bankruptcies popping up lately, such as the filing of the Minneapolis-based Dolan Co. They filed for Chapter 11 protection after listing their debt at $185.9 million and their assets at $236.2 million as of September.
But while there has been news of business bankruptcy, there is news that the number of foreclosures is down overall.
Since bankruptcy and foreclosure sometimes go hand-in-hand, foreclosure statistics are very important, as they can be indicators of many other financial elements.
Black Knight Financial Services has taken a look at the foreclosure data that has come out of February 2014. They found the following:
- The number of foreclosures have dropped by over half a million since February of 2013
- There are now almost 1 million fewer delinquent mortgages than in 2013.
- There were nearly 92,000 foreclosure starts in February, but that marked a year-over-year decline of 30 percent.
The monthly prepayment rate, which is a good indicator of refinance activity, has declined by nearly 64 percent in a year-over-year analysis. There are a number of states that are seeing high rates of delinquent loans, but Minnesota is not one of those.
This is just a preview of the report that Black Knight is putting together, but they released some data early to show how things are turning around for property owners.
In addition to these figures, it was also found that the subprime mortgage is making a comeback. The loans are once again growing in popularity as individuals with less than perfect credit seek to become homeowners.
However, things are different this time around.
Subprime mortgage loans are different this time around because lenders are requiring down payments and they are charging higher interest rates. During the housing bubble, lenders would hand out subprime mortgages with very low teaser rates and little or no down payments. This was a major contributor to the number of foreclosures in Minneapolis, throughout Minnesota, and throughout the entire country.
As far as how much market share subprime is getting, it really isn’t a whole lot. This does make things more secure at the high end of the credit spectrum. It was found that borrowers with credit scores below 620 only made up .35% of mortgages in January 2013. That is down 13% over 2003. Those borrowers with scores above 780 have taken the place of those with lower scores. That’s around 30 percent of borrowers today.
So could 2014 be the year that the housing market truly recovers?
The market forecast is rough, but many are seeing 2014 as a progressive year. The pace will most likely be slow, but the gains in home prices will be modest.
It is very possible that the gains could have been more if the winter had not been so brutal. It is believed that some house hunters confined themselves to looking online rather than physically viewing properties. As the weather warms up, it is expected that more individuals will be physically viewing homes and this could result in a slight boost in the rate that homes are being sold throughout Minnesota and the country.
As the year progresses, the relation between bankruptcies and commercial and home foreclosures is expected to become more evident.