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August 2023 » thefivestar.com 65 J O U R N A L August 2023 engaging homeowners who may be strug- gling to pay their mortgage and empowering them with tools that help them understand their options, servicers can expect positive outcomes that may include higher portfolio retention, increased customer satisfaction and loyalty, greater servicing efficiency, and fewer third-party collections." UNDERWATER MORTGAGES ON THE DECLINE AS HOME PRICES REBOUND W hile the housing market contin- ues to moderate, ATTOM has released its Q2 2023 U.S. Home Equity & Underwater Report, which shows that 49% of mortgaged residential properties nationwide were considered equity-rich in Q2. The share of mortgaged homes that were equity-rich in Q2 of 2023 increased from 47% in Q1 of 2023 to the highest point in at least four years. With home prices rebounding across the United States, the report found that the level of equity-rich mortgage payers went up from Q1 of 2023 to Q2 of 2023 in 45 of the nation's 50 states. The gains followed two straight quarterly drop-offs caused by a temporary slowdown in the U.S. housing market that had threatened to end a decade-long run of price and equity growth. The second-quarter upturn marked another sign of how the market shift has helped homeowners, as home-seller profits also spiked. While equity-rich levels rose in Q2, the report also shows that less than 3% of mort- gaged homes in the United States, or one in 36, were considered seriously underwater in Q2 of 2023. That meant they had a combined estimated balance of loans secured by the property of at least 25% more than the prop- erty's estimated market value. New data showed just 2.8% of mort- gaged-homes were seriously underwater in Q2 of this year, also the lowest point since at least 2019. The latest figure was down from 3% in the prior quarter and 2.9 in Q2 of 2022. "The second-quarter market revival bestowed immediate benefits on homeown- ers around the nation in the form of better profits for sellers and rising equity for those staying put. Equity levels were high even during the recent downturn, and now they are going back up and better than ever," said Rob Barber, CEO for ATTOM. "It is well worth nothing that the market remains in flux and the recent improvement could easily be temporary. Equity for U.S. homeowners improved in Q2 as prices for single-family homes and condos nationwide rose throughout most of the country, reversing a market slowdown that had run from the middle of last year to the early part of this year. Nationwide, the median home value jumped 10% in Q2 to yet another all-time high of $350,000, after drop- ping 7% over the prior three quarters. The rebound came amid multiple factors that combined to put more financial resources in the hands of house hunters during a time of rising demand and tight housing inventory. The portion of mortgages that were equity-rich grew in most states around the United States from Q1 of 2023 to Q2 of 2023, commonly by up to four percentage points. The biggest gains came in the Midwest region, led by Wisconsin (portion of mortgages homes considered equity-rich rose from 41.6% in Q1 of 2023 to 47.1% in Q2 of 2023), Michigan (up from 42.5% to 47.7%), South Dakota (up from 41.4% to 46.4%), Ohio (up from 36.7% to 41.3%), and New Jersey (up from 38.9% to 43%). At the other end of the scale, the South and West regions had the only states where the equity-rich share of mortgaged homes decreased from the first quarter to the second quarter of this year. They were Nevada (down from 49% to 46.8%), Louisiana (down from 24.1% to 23%), Arizona (down from 56.4% to 55.3%), Florida (down from 61% to 60.4%), and Utah (down from 58.1% to 57.8%). The portion of mortgaged homes consid- ered seriously underwater also dipped and remained historically low during Q2 of 2023 in most of the nation. The rate declined in 37 states, with the biggest decreases clustered in the Midwest—a region that has some of the highest levels of seriously underwater mortgages. The improvements were led by Missouri "By proactively engaging homeowners who may be struggling to pay their mortgage and empowering them with tools that help them understand their options, servicers can expect positive outcomes that may include higher portfolio retention, increased customer satisfaction and loyalty, greater servicing efficiency, and fewer third-party collections." —Joe Nackashi, CEO of Black Knight