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This issue of the Monitor also contains an evaluation of the differences in thernrecovery of home prices by property price tier. rnUsing its Home Price Index (HPI) the company put homes into five equalrnprice tiers for every zip code it tracks. rnTier 1 represents houses in the lowest 20 percent price range and Tier 5rnis the top 20 percent by price.</p

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According to Trey Barnes, BlackrnKnight’s senior vice president of Loan Data Products, “We looked at HPIrnappreciation from pre-crisis peaks to today in the 10 states currently trailingrnthe furthest behind their pre-crisis housing maximums. The data showed a clearrndifference in the levels of recovery among home price tiers. Those in thernlowest 20 percent of home values have been lagging behind their higher-valuedrncounterparts in recovery to pre-crisis peaks, sometimes considerably. </p

“For example, in Nevada – overall,rnstill more than 39 percent off its pre-crisis peak – properties in the lowestrntier are nearly 47 percent off their peaks, as compared to 36 percent for thosernin the highest tier. In California, an even starker contrast emerges:rnproperties in the highest tier have now come within just over 3 percent ofrntheir pre-crisis peak, while those in the lowest 20 percent are still almost 32rnpercent down. In many cases, these disparities between price tiers can bernattributed to the fact that during the bubble, lower-tier propertiesrnappreciated at much higher rates than higher-valued properties and likewisernfell harder and further when the bubble broke.”</p

Finally, Black Knight looked at recentrnloan modification activity, noting that it had declined overall in 2014 and wasrndown from its high periods during the year as well.  The Home Affordable Modification Programrn(HAMP), jointly sponsored by the Departments of Housing and Urban Development andrnTreasury, was dwarfed by private lenders in the numbers of modifications itrnprocessed in the 2009-2011 period, but was responsible for over 50 percent ofrnthe total by November of 2014.  </p

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In addition to relative volume, therncomposition of investor types for which modifications were performed either byrnHAMP or through proprietary programs has shifted over the years as well.  Loans owned or guaranteed by the governmentrnsponsored enterprises (GSEs) Freddie Mac and Fannie Mae were the source of over 70rnpercent of the modifications facilitated by HAMP in 2009 but are primarily thernprovince of proprietary programs today.  The reverse has happened with VA and FHA loansrnwhich have gone from a negligible share of HAMP modifications in 2011 to overrn70 percent in 2014.  </p

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HAMP modifications have always featuredrnlarger monthly payment reductions than their proprietary counterparts.  As HAMP’s client base has shifted toward thernsmaller VA/FHA loans these payment change amounts have decreased, butrnpercentage reductions among HAMP modifications are also down. </p

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HAMP modifications have always performedrnbetter than their proprietary counterparts in terms of redefaults,  That gap has narrowed but still persisted inrnrecent years, even as HAMP’s mix has moved overwhelmingly toward the higherrndefaulting FHA/VA loans.   However BlackrnKnight notes that early data on 2014 HAMP modifications showed that vintage defaultingrnat a higher rate than modifications done in 2012 and 2013. </p

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Step increases of interest rates onrnHAMP modifications began in the third quarter of 2014 although few loans havernyet been affected.  Black Knight said thernimpact of the payment hikes will be more apparent beginning with the firstrnquarter of 2015 as the larger volumes of modifications done in 2010 hit theirrnfifth year, the benchmark for many interest rate increases.

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