Home sellers have an enjoyed an extended sellers’ market over the last seven years, selling at a 2.9 percent premium above estimated market value on average, according to an ATTOM Data Solutions analysis of 14.7 million home sales from 2011 to 2017. Home sellers selling in the late spring and early summer are realizing the biggest premiums — 5.9 percent on average in May and 5.8 percent on average in June, with 17 of the 20 best days to sell in those two months.




return — holding the loan in its portfo- lio and collecting interest over time, or packaging and reselling the loan, either to investors who buy whole loans, or as part of a securitized transaction. To help ensure success, NPL purchasers very often offer principal balance reduc- tion to borrowers who successfully make on-time payments during a trial period. Companies who are successful with this approach often help as many as two-thirds of these borrowers avoid foreclosure — quite an outcome, considering that typi- cally almost 100 percent of the loans in an NPL pool are already in foreclosure when they’re purchased by the investor. A decade after the bankruptcy of Leh- man Brothers marked the unofficial be- ginning of the financial market meltdown, the pipeline of NPLs is finally drying up — unsurprising, since delinquency levels are back to normal levels, and the number of loans in the foreclosure process is roughly a third lower than normal. Many of the formerly non-performing loans are now performing nicely, and RPLs are becoming a hot commodity in the insti-

tutional investment community. By Car- rington’s estimation, RPL purchases now surpass NPLs. In 2017 there were roughly $30 billion in RPL sales compared to $12 billion in NPL sales, and the trend has continued into 2018, with first quarter sales leaning towards RPLs by a margin of about $8 billion vs. $5 billion for NPLs. RPL buyers tend to be different types of investors than NPL buyers — they have different (longer) time horizons for their investments and different yield profiles. And the risk/reward ratio tends to also differ, which means “safer” loans like RPLs typically don’t sell at the kind of discounts that characterized NPL sales. In fact, seasoned RPLs (clean payment records for 24+ months) with high equity often sell at par or even above. But the availability of these loans — both as whole loans and in securities — has attracted interest from a variety of funds looking for longer-term investment opportunities. The presence of these RPLs is bring- ing back institutional investors to the mortgage securities market, perhaps an early sign that private capital will

begin to lessen the industry’s depen- dence on the overwhelming amount of government funding that’s poured into mortgages over the past 10 years. And every RPL represents a borrower who was in some sort of financial distress but was able to correct course and maintain homeownership. In addition to the obvious benefit to these borrow- ers, RPLs kept hundreds of thousands of properties from flooding the market as distressed homes (the long-rumored “shadow inventory”), which would have further depressed home prices, and prolonged an already interminably long recovery in the housing market. As second acts go, RPL performance has been nothing short of a true Ameri- can success story. •

ATTOM Data Solutions analyzed 14,729,578 single family home and condo sales between 2011 and 2017, comparing median prices for those homes — based on recorded sales deed data — with the estimated market value of those homes in the month they were sold — based on an automated valuation model (AVM) that takes into account recent, nearby sales of similar homes. The seller premium was the percentage the median sale price was above (or below) the estimated market value at time of sale.

Rick Sharga, executive vice president for Carrington Mortgage Holdings, serves as the primary spokesman for Carrington and is responsible for

directing public relations and communications, as well as branding and marketing strategies for all of the Carrington Companies.

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