Home foreclosures and REO (bank-owned) properties no longer drive distressed property valuations, according to the FNC Appraisals Pipeline Report released earlier in the week.
FNC, a mortgage technology company based in Oxford, Mississippi, stated in the report that 15 percent of distressed property valuations in August were on in-foreclosure and REO properties, down from 60 percent at the start of the housing recovery two and a half years ago.
Instead, actions such as loan restructuring, loan modifications, loss mitigations, bankruptcies, and tax delinquencies are driving distressed property valuations, according to FNC. The report found that the aforementioned actions accounted for nearly 60 percent of the distressed valuation volume in August.
"With home prices in a 29-month rising streak and strengthening equity positions for many homeowners, our data shows that home foreclosures and REO properties no longer drive valuations of distressed properties," FNC Director of Research Yanling Mayer said.
FNC reported that distressed properties made up more than 60 percent of all servicing volume. Distressed properties are classified as such if they are in foreclosure or are bank-owned; short sales or deed-in-lieu of foreclosure; or any other type of distress, including bankruptcy and tax delinquencies. Since early 2013, the total number of appraisals of REO and properties in foreclosure has been steadily declining, according to FNC.
Short sale property appraisals comprised close to 30 percent of the distressed valuation volume in August, a decline from its peak of 40 percent in Spring 2013, FNC reported.
FNC's Appraisals Pipeline Report is compiled using data from appraisal orders reported through FNC's Collateral Management System (CMS), which is widely used in the mortgage industry nationwide.