Chicago Relocation

Core Logic – “Over Two-Thirds of Above-Average LTV Loans Have Above-Market Interest Rates”

September 12, 2012

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John D’Ambrogio

Wow.  What a telling statement about the market, how we got here, and where we are today.  2/3 of above average LTV loans have above-market interest rates?  This stat recently released by the folks at Core Logic.

The report also states that almost 11 million (over 22%) of all U.S. mortgages were in a negative equity position today (the report was compiled in late November 2011).  The number was down just a hair from Q2′s stats.  Why is this such an important issue?   Mark Fleming, CoreLogic’s chief economist explains - “Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness. The nearly $700 billion mortgage debt overhang has touched many corners of the market, and this overhang is holding back the recovery of the housing market and broader economy.”

This is an even more touchy situation for the relocation industry.  If you extrapolate that over one out of five homeowner transferees is “underwater” – who pays the difference?  Do they decline the move?  Do they get the offer rescinded?  It’s even more touchy for accounting and consulting firms, who build up their value by having many many partners in their firm.  Ironically, sometimes the only way to a partner track is to take a transfer to another market.

However, when you’re underwater, there may be no way to do that except by participating in a short sale or other method that will affect your credit report.  That’s where the irony comes in – the move (to keep on partner track) will result in you not being able to become a partner based on your new credit score.

The trickle down/trickle UP effects of this market are far, far far reaching.

corelogic graph