Western States Rebounding from Terrible Foreclosure Landscape
States once the worst in the nation now doing better than Midwest
The news of their good fortune comes from an analysis released by Fannie Mae last week, which showed the performance of its own $2.8 trillion loan portfolio. The states that were hit the hardest in the West (Arizona, California, Nevada, and Florida) were said by Fannie Mae had once seen loans go bad eight times as often as the national average. However, according to the finance group, that is all now changing.
A mere 7% of Fannie's 2013 credit losses come from the Golden State, which is home to a fifth of all loans and over a quarter of the 2011 writeoffs stemming from defaults and foreclosures. Arizona has a 2.4% of Fannie's outstanding balances, while it has seen the share of credit loss fall as far as 1.8%. The number is a necessary improvement after having a 12% tally in 2011.
Florida, by contrast, is now accounting for nearly 30% of all Fannie Mae's losses, which is a rise of nearly 19% from where the state stood in 2011. Meanwhile, Midwestern states are also looking risky. Fannie Mae states that 10% of its loans and 22% of its losses in Ohio, Illinois, Indiana, and Michigan.
The shifts is claimed by two variables: First, there is a longer foreclosure process that is handled by the courts to approve or overrule the process, and the fact that prices are rising quickly for “sand states” like the West Coast states.
There is also the issue of sand states' economies adding jobs at a faster rate than the Midwestern states. While this is not the top variable to constitute change, it does factor in.
Since Fannie Mae is able to credit losses to complete foreclosure on bad loans, slower “judicial foreclosure” in states like Florida, Illinois, Indiana, and so on mean losses are only now taking effect.
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