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» FED DATA SHOWS CONSUMER DEBT ROSE IN Q4, MORTGAGE DEBT FLATTENED Mortgage debt for U.S. households was roughly unchanged quarter-over-quarter, according to the Federal Reserve Bank of New York. Total mortgage debt outstanding stood at $8.03 trillion in Q 4 2012, making up the largest component of household debt. Overall consumer debt increased by $31 billion to $11.34 trillion, a slight 0.3 percent increase from the third quarter of 2012. The increase was mostly due to "a rise in nonhousing debt and the stabilization of mortgage debt," the New York Fed stated. Non-housing debt increased 1.3 percent to $2.75 trillion. The rise in consumer debt also broke a downward trend that first began in Q 4 2008, according to the report. Despite the fourth-quarter growth, Fed officials noted consumer debt declined significantly since peaking at $12.68 trillion more than four years earlier. "Since the third quarter of 2008, its peak, household debt has fallen by $1.3 trillion—about 10 percent—mostly because of declining mortgage balances," James McAndrews, EVP and director of research at the New York Fed, told reporters at a press briefing on the latest numbers. While outstanding mortgage debt remained roughly flat from the third to fourth quarters of last year, home equity lines of credit (HELOC) saw a significant decline, falling by $10 billion, or 1.7 percent, to $563 billion. The fourth-quarter serious delinquency rate for HELOCs fell to 3.5 percent, down from 4.9 percent in the previous quarter. According to the Fed's report, the decline can largely be attributed to "high charge-offs of delinquent HELOCs." The mortgage delinquency rate also continued to improve in Q 4, with 5.6 percent of mortgage balances 90 or more days past due, compared with 5.9 percent in the previous quarter. Fewer foreclosure notations were added to credit reports during the final quarter of 2012." About 210,000 individuals had new foreclosure notations pop up on their credit reports between September 30 and December 31, a 13.3 percent decrease. About 336,000 consumers had bankruptcy notations added to their credit reports in Q 4, a 21 percent drop from 2011 and the eighth consecutive decline in bankruptcies on a yearover-year basis. The Fed also reported originations, measured as appearances of new mortgage balances on consumer credit reports, rose to $553 billion. Officials say the level of originations has been on the rise since bottoming out in the third quarter of 2011. VISIT US ONLINE @ DSNEWS.COM REPORT: 43% OF 2012 HOME SALES DISTRESSED AS NONFORECLOSURE SHORTS GAIN MARKET SHARE Foreclosure-related sales are on the decline but distressed sales continued to claim a "disproportionately high portion" of total home sales in 2012, according to RealtyTrac's latest REO and short sales report. The foreclosure tracking firm also found increases in prices of distressed properties last year. Distressed property sales made up 43 percent of all home sales nationwide in 2012, according to RealtyTrac's assessment. Foreclosurerelated sales—bank-owned properties and pre-foreclosure short sales—made up 21 percent of all residential sales, while properties not in foreclosure that sold as short sales accounted for 22 percent. Pre-foreclosure short sales—properties in default or scheduled for auction—increased 6 percent from 2011, while sales of REOs decreased 15 percent. A total of 947,995 properties in some stage of foreclosure or bank-owned were sold during the year in 2012. "Although foreclosure-related sales represent a shrinking share of total sales, primarily because of fewer bank-owned purchases, distressed sales are still a disproportionately high portion of the overall housing market," said Daren Blomquist, VP at RealtyTrac. Prices for properties in foreclosure or REO increased 4 percent year-over-year in the fourth quarter of 2012 and demonstrated a 2 percent rise from the third quarter. The average price for these properties in the fourth quarter was $171,704, according to RealtyTrac. Blomquist pointed out distressed properties "are still selling at a significant discount compared to non-distressed properties." However, "distressed property prices are increasing in many markets thanks to strong demand and limited inventory," he said. The average price for a pre-foreclosure property in the fourth quarter was $190,031, representing a 2 percent increase year-over-year. However, the average pre-foreclosure price remained 23 percent below the average price for a non-foreclosure property. Pre-foreclosure homes that sold in the fourth quarter took an average of 336 days to sell after starting the foreclosure process, down from 359 days in the previous quarter but still up from 308 days in the fourth quarter of 2011, RealtyTrac reported. REO homes traded at an average price of $151,998 in the fourth quarter of 2012, up 3 percent from the fourth quarter of 2011. The average price for an REO was 39 percent below the average for non-foreclosure properties. REOs that sold in the fourth quarter of last year took an average of 178 days to sell after being foreclosed, down from 186 days in the third quarter but up slightly from 175 days in the fourth quarter of 2011. The share of REO sales declined in 2012. Eleven percent of all home sales last year involved REO properties, down from the 13 percent share recorded for the year in 2011. However, REO sales increased in 26 states. The biggest increases were in Illinois (19 percent), Pennsylvania (12 percent), and Massachusetts (12 percent). Non-foreclosure short sales—where the sales price was below the amount of all outstanding loans on the property—rose in each quarter of last year, ending 2012 with a 17 percent year-over-year increase from Q 4 2011. In three states—Michigan, Florida, and Nevada—nonforeclosure short sales made up about one-third of all sales. RealtyTrac says non-foreclosure short sales in 2012 were on average $81,621 "short" of the loan amount owed on the property. By comparison, properties in the foreclosure process that sold as short sales were $129,817 "short" of the loan amount. VERBOSITY Nine in 10 homebuyers today rely on the Internet as one of their primary research sources, and 52% turn to the Web as their first step, according to the National Association of Realtors' 2012 Profile of Home Buyers and Sellers. 23

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