Why There Are Less El Paso Foreclosures Compared with Other Big Cities

by Peter Vernon on Foreclosures

El Paso foreclosures are considerably low, given the fact that Texas is a state much like Nevada and Arizona, where real estate developers can have free reign when it comes to expansion because of the lay of the land.

 
According to the Mortgage Bankers Association, less than six percent of mortgage borrowers in the State, which total 3.1 million, are facing or about to face foreclosure. This figure includes big cities like El Paso and Dallas.
 
Compared with Arizona and Nevada, wherein 13 percent and 19 percent of borrowers are in foreclosure, respectively; Texas is actually doing really good. The state also has the lowest rate of foreclosure among its subprime borrowers in the whole nation except Alaska.
 
Several factors have been cited for the low number of foreclosures for sale in Texas; one is that the state had not experienced the high rate of run ups in real estate prices that other areas in the United States did.
 
State-wide statistics show that prices of El Paso foreclosures and other metro areas in the state rose by just an average of, more or less, 20%, and they barely declined since 2006. But the primary reason for the decent number of foreclosures for sale in Texas, according to analysts, is the state’s ability to control home equity lending and cash out refinancing.
 
According to real estate market analysts, the state has wisely put in place a policy wherein home equity and cash out loans cannot account for more than 80% of a property’s appraised value. Also, borrowers who use mortgage refinancing are not allowed to get a cent back. It also helped that very few borrowers in Texas use home equity as a source of cash.
 
This, according to market analysts, effectively lowers loan delinquency in the state and in turn, produces a small number of foreclosures for sale in Texas compared with other major states. The Federal Reserve Bank of Dallas also stated that the low unemployment rate in the area, pegged at 8.6%, contributed to the low percentage of foreclosures.
 
The number of El Paso foreclosures and foreclosed properties in other metro areas of Texas are relatively lower than those found in other big states. Market analysts have asserted that this is primarily due to the state’s restriction on cash out loans and its ability to impose discipline among real estate loan borrowers.

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