Housing Market to See Boost from Boomerang Buyers?

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Housing Market to See Boost from Boomerang Buyers?
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• UPITER, Fla. Some housing experts are
  trumpeting changes that allow foreclosure
  sufferers to buy back into the American Dream
  sooner than they probably imagined, calling 2014
  the year of the boomerang buyer.
• Revisions made over the summer to Federal
  Housing Administration guidelines and technical
  updates in November to Fannie Mae loan approval
  systems have opened the door for some former
  homeowners to buy again just one year after
  foreclosure.

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• Founders of the San Diego-based company
  AfterForeclosure.com said last month that
  millions of banned borrowers nationwide will be
  eligible for a mortgage this year, while Jupiter
  mortgage broker Skip McDonough said his firm is
  already doing deals with homebuyers who were
  forced into default during the housing bust.
• The old-fashioned way of doing it was a
  seven-year waiting period, said McDonough,
  president of Family Mortgage. Thats changed,
  and people who dont believe they can qualify are
  qualifying.

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• McDonough and Jon Maddux, co-founder
  of AfterForeclosure.com, said the boomerang
  buyers are necessary to maintain a growing
  economy as other drivers fade.
• Investors, who bolstered home sales during
  the real estate recovery, will reduce purchases
  as prices climb. Recent college graduates with
  student debt might not have the means to buy. And
  underwater homeowners are still stuck in a
  holding pattern unable to sell so they can move
  up and buy anew.

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• People who are primed to buy are the ones who
  qualify on all levels but had a short sale or
  foreclosure on their record, Maddux said. The
  refinance boom is over and lenders are looking
  for a way to capture more business.
• Under the Federal Housing Administrations
  Back to Work program, it will approve certain
  borrowers for a home loan just one year after a
  foreclosure, short sale, deed in lieu of
  foreclosure or bankruptcy. FHAs previous time
  line was three years for a short sale and
  foreclosure and two years for a bankruptcy.

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• Federal mortgage backer Fannie Mae has
  previously allowed homebuyers who completed a
  short sale to buy again after two years if they
  put 10 percent down, but an automatic
  underwriting system couldnt differentiate a
  short sale from a foreclosure and would spit out
  a denial. The application could then be referred
  for a manual review. But those were often denied
  based on the computers refusal, Maddux said.

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• Eligibility for a loan fast-track hinges on
  whether borrowers suffered a specific financial
  event during the recession that, through no fault
  of their own, caused them to lose their home.
  Also, the foreclosure or short sale should be the
  only blemish on a credit report. For an FHA
  mortgage, the homebuyer must take a housing
  counseling class.

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• People who walked away simply because their
  house was underwater likely wont qualify.
• Michael Kodsi, chief executive officer of
  Choice Mortgage Bank, Inc. in Boca Raton, Fla.,
  said hes had three inquiries recently from
  boomerang buyers.
• Theyve been taught a lesson. They want their
  house payment to be affordable, Kodsi said. The
  people Ive dealt with are more excited than ever
  to own their own home and are sick of renting.

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• But there is a reality check. People who can
  get a loan might not always be able to find a
  house. Theyre coming into a market with
  historically low interest rates, but also low
  inventory. And because they have a default on
  their record, they may not qualify for the amount
  of loan they want.
• A lot of people who did a short sale for a
  low price are getting back in the market and have
  sticker shock, said Realtor Shannon Brink, with
  RE/MAX Prestige Realty in West Palm Beach, Fla.
  The prices are higher and financing is a
  challenge.

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• Still, its happening. McDonough had a
  client buy a 515,000 Jupiter home this fall,
  less than three years after a short sale on his
  previous property. The short sale reduced his
  credit to below 600, but two years of good
  payment history helped it shoot up to 740.
• Former North Palm Beach, Fla., homeowner
  John Lebeau battled through a nasty and he says
  fraudulent foreclosure for years before it
  ended in an October eviction. He said hes having
  trouble finding a place to rent because his
  credit is shredded, but is eager to buy again
  when he can.

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• Lebeau said it makes more financial sense to
  own, especially with todays lower interest rates
  and if the plan is to stay in the home five years
  or more.
• There are other reasons, too
• These are people who believe in the American
  Dream and believe homeownership is the way to
  go, McDonough said.

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