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23 BORROWERS GAIN OVER 3.2 TRILLION IN EQUITY THROUGHOUT 2021 CoreLogic released the Homeowner Equity Report for Q4 of 2021, showing U.S. homeowners with mortgages experienced an increase in equity by 29.3% year over year. is number represents an overall equity gain of more than $3.2 trillion, and an average gain of $55,300 per borrower since Q4 of 2020. According to CoreLogic's latest Home Price Index, year-over-year price appreciation also increased by 19.1% in January 2022, although growth is projected to slow gradually over the next year. Nationwide, home prices rose 18% year over year in Q4 of 2021, up from the 8% annual gain recorded in Q4 of 2020. e appreciation helped push the national negative equity figure to the lowest in more than a decade, with only 1.1 million homeowners underwater on their mortgages. Western state homeowners saw the biggest equity gains by dollar value, led by Hawaii, California, and Washington. "Home prices rose 18% during 2021 in the CoreLogic Home Price Index, the largest annual gain recorded in its 45-year history, generating a big increase in home equity wealth," said Dr. Frank Nothaft, Chief Economist for CoreLogic. "For low- and moderate-income homeowners, home equity has historically been a major source of wealth." Negative equity, also referred to as underwater or upside-down mortgages, applies to borrowers who owe more on their mortgages than their homes are currently worth. As of Q4 of 2021, negative equity share, the quarter-over-quarter and year-over-year changes were as follows: Quarterly change: From the third quarter of 2021 to the fourth quarter of 2021, the total number of mortgaged homes in negative equity decreased by 3% to 1.1 million homes, or 2.1% of all mortgaged properties. Annual change: In Q4 of 2020, 1.5 million homes, or 2.8% of all mortgaged properties, were in negative equity. is number decreased by 24.9%, or approximately 380,000 properties, by Q4 of 2021. Distribution of negative equity: Of loans in negative equity in Q4 of 2021, 42% had a loan-to-value ratio below 125%, and 58% had a loan-to-value ratio of 125% or higher. Since home equity is directly affected by home price changes, borrowers with equity positions near the negative equity cutoff are most likely to move out of or into negative equity as prices change. If home prices increase by 5%, some 141,000 homes would regain equity, according to the book of mortgages for Q4 of 2021. If home prices decline by 5%, an estimated 183,000 homes would fall underwater. e CoreLogic HPI Forecast projects home prices will increase approximately 5% from December 2021 to December 2022. Journal