Boomerang Buyers: Most Qualify for Financing in 2-3 Years

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According to a new study from Lending Tree, Americans who have filed for bankruptcy may be able to rebuild enough credit to qualify for a home loan in as little as 2-3 years.

This is in stark contrast to the belief that many have that they need to wait 7-10 years for their bankruptcies to clear from their credit reports before attempting to apply for either a mortgage or a personal or auto loan.

The study analyzed over one million loan applications for mortgages, personal, and auto loans and compared borrowers who had a bankruptcy on their credit report vs. those who did not to find out the “Cost of Bankruptcy.”

The study found that 43.2% of Americans who filed bankruptcy were able to repair their credit back to a 640 FICO® Score in less than a year. The percentage of those who achieved a 640 FICO® Score increased to nearly 75% after 5 years. The full breakdown of the findings was used to create the chart below.

Boomerang Buyers: Most Qualify for Financing in 2-3 Years | MyKCM

Americans who were able to repair their credit scores to a range of 720-739 within three years of filing were able to obtain the same financing options as those who had never filed bankruptcy.

According to Ellie Mae’s latest Origination Insights Report, 53.5% of those who were approved for a home loan had FICO® Scores between 600-749 last month. This is great news for Americans who are looking to re-enter the housing market.

Boomerang Buyers: Most Qualify for Financing in 2-3 Years | MyKCM

Raj Patel, Lending Tree’s Director of Credit Restoration & Debt-Related Services had this to say:

“People may think that filing a bankruptcy would put you out of the loan market for seven to ten years, but this study shows that it is possible to rebuild your credit to a good credit quality.”

“LendingTree’s research found that very few bankruptcy filers have a harder time [obtaining a mortgage] than those who have not filed for bankruptcy.”

Bottom Line

If you are one of the millions of Americans who has filed for bankruptcy and think that you have to wait 7-10 years to make your dream of returning to homeownership a reality, let’s get together to find out if you qualify now.

A Million+ Boomerang Buyers about to Enter Market‏

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TransUnion recently released the results of a new study titled The Bubble, the Burst and Now – What Happened to the Consumer? The study revealed that 1.5 million homeowners that were negatively impacted by the housing crisis could re-enter the housing market in the next three years. TransUnion defined “negatively impacted” as…

“…those who were 60+ days past due on a mortgage loan, lost their mortgage through foreclosure, short sale or other non-satisfactory closure, or had a mortgage loan modification between the Bubble and Burst.”

Other interesting findings in the study:

  • During the mortgage bubble in 2006, 78 million consumers, or 43% of credit-active consumers in the U.S., had a mortgage
  • More than 8% of these consumers were “impacted”
  • 5 Million consumers will again be eligible for a mortgage in the next four years

Here are the number of consumers who will meet mortgage guidelines over the next four years.

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Bottom Line

If you are a family that experienced the impact of the last housing crisis, now may be the right time to again buy your own home.

They’re Back – Boomerang Buyers


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SEBRING, Fla. – Sept. 9, 2015 – Three years ago, her husband lost his job, and Mary Ford quit two part-time jobs to take care of her mother, who had been diagnosed with lung cancer.

“We lost our house to foreclosure and had to file bankruptcy,” said Ford. That was her dream house.

But the Fords are back from the brink of the real estate market: they’ve bought a trailer on a half-acre.

Seven years ago, the Great Recession hit Florida especially hard. The Sunshine State led the nation during the housing boom, and it was first in foreclosures when the bubble burst.

Highlands County was right there among them. Clerk of Courts Bob Germaine recorded more than 7,000 foreclosures from 2007 through 2014.

But eight years after the downturn started, buyers damaged by excessive medical bills, balloon mortgages, an upside-down housing market, or a screwball economy are finding their way back into the real estate market.

“Absolutely,” said Chip Boring, a broker with RE/Max Realty Plus in Sebring. “Now that time lapse has taken place.” Real estate agents, banks and mortgage brokers are working with buyers now, Boring said. “They are counseling them – at no cost – on how to make repairs, getting their credit back up to speed.

“The message is: ‘You can buy another house, if you do the right things and seek counsel. There are mortgage brokers out there. There are lenders are out there,” Boring said.

Boomerangs are just a small percentage of today’s buyers, Boring said. “Maybe they are a little bit gun shy. Many have not have repaired their credit yet. Maybe they’re a year down the road from that.”

Pam Marron is one of those next-generation loan originators in Pasco County, north of Tampa.

“I have been working with folks who had a past foreclosure or short sale for the last five years,” said Marron, who has been in the business for 30 years. She has collected binders of profiles and stories of those affected across the U.S., many in Florida.

“Each of them has a story of real hardship that they almost never shared with their Realtor or loan originator,” Marron said. “Many were short sellers where their credit ended up being coded as a foreclosure, which resulted in a seven-year wait to get back into the housing market.”

Some went delinquent on their mortgage because it was the only option their own lender gave them in order to approve a short sale or foreclosure, said Marron, whose own business was drying up because of the housing crash.

“They were told they had to be delinquent in order to get help,” Marron said. More than 7 million homeowners are still underwater. “They’re ashamed, they’re humiliated, they’re wondering why they didn’t see this coming.”

“With no refinance options available for them,” Marron said. “Now, they’re going into short sale or foreclosure. Florida still has the highest number of homeowners in distress.”

Typically, a short seller’s credit is damaged for two years, Marron said. It takes seven years for a foreclosure to drop off a credit report.

“Many have not been given the opportunity to state that they did not go into a short sale or a foreclosure (willingly). Instead, most were labeled as ‘strategic defaulters,” Marron said. “And it has been incredibly hard for them to come forward. There is a website called HousingCrisisStories.com, where these stories are starting to be housed.”

Marron has invited people to attend a seminar from 3 p.m. to 4:30 p.m. Nov. 10 in Clearwater. RealtyTrac Vice President Daren Blomquist will be the guest speaker. Buyers will be told of programs, timeframes for waiting, how to spot credit report errors, how to buy damaged homes in need of renovation, and how to get downpayment assistance. Fannie Mae has changed its lending criteria.

“They’ll also learn how not to dispute their credit,” Marron said. “When you dispute something, the dispute goes back in, then the bad credit shows up again. You have to work with the credit reporting agencies and have them take off the error.”

Copyright © 2015 the Highlands Today (Sebring, Fla.), Gary Pinnell. Distributed by Tribune Content Agency, LLC.