19 Feb Boomerang Buyers – Bringing Back the Housing Market?
According to the Detroit News, housing experts are predicting that many foreclosure sufferers may soon be able to be homebuyers again in 2014. This growing group of bounce-back adults is now coined 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.
The old-fashioned seven-year waiting period has changed and formerly banned borrowers are now qualifying once again for a mortgage.
The co-founder of AfterForeclosure.com believes the boomerang buyers are essential to maintain a growing economy, as investors are less active as prices climb and recent college graduates with student debt may not have the means to buy.
The Detroit News goes on to explain that under the Federal Housing Administration’s “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. FHA’s previous timeline was three years for a short sale and foreclosure and two years for a bankruptcy.
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 couldn’t differentiate a short sale from a foreclosure and would spit out a denial.
Another criteria for an FHA mortgage, previously foreclosed homebuyers must take a housing counseling class. People who walked away simply because their house was underwater likely won’t qualify.
What do you think? Are “boomerang buyers” good for the housing market in 2014? Share by commenting below!
image courtesy of popularmechanics.com