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Boomerang buyers may become homeowners again 2 yrs earlier under the new FHA revisions. The Celebration of stepping back into homeownership!
2.5 million U.S. citizens who previously were homeowners, but lost their homes to foreclosure may be eligible to re-entering the housing market as boomerang home buyers much faster than before. Revisions in the Federal Housing Administration (FHA) guidelines have shortened the wait time by a generous 2 years. This reduces the time getting a mortgage after foreclosure.
HUD Allows Previous Homeowners With Damaged Credit To Be Reinstated
Released August 15, 2013, by the U.S. Department of Housing and Urban Development (HUD) in Mortgagee Letter 2013-26, the new guidelines allow these previous homeowners with a smudge on their credit history to qualify for another home mortgage as immediately as 12 months after foreclosure or pre-foreclosure sale (typically a short sale). For those individuals who experienced the sorry of loosing their home in this manner that is powerfully good news. The new guidelines slice a full two years off the 36-month minimum window that was a barrier to re-buying under former guidelines.
RealtyTrac data shows nearly 2.5 million additional homeowners could now become so-called “boomerang buyers” due to this change. That 2.5 million is the number of homes lost to foreclosure or short sale between September 2010 and August 2012 —the date range that in effect was added by the loosening of the guidelines.
Losses To Foreclosure Due to Extenuating Circumstances
The government understands that some homeowner fell on hard times and are seeking how to prepare to buy a home again. The recession fell on many home borrowers without enough to fall back on when hit unexpectedly with mounting medical bills, a job loss, or other severe reductions in income, and found themselves unable to make their monthly mortgage payments. Too many lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Other homeowners felt pressed into a bankruptcy filing to discharge or restructure accruing debts. Another bite of recession-related financial challenges, is the damage it left behind on the same borrowers’ credit.
The U.S. DEPARTMENT OF HOUSING AND URBAN Development's Mortgagee Letter states: "FHA recognizes the hardships these borrowers were faced with, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage".
"The ability and willingness of boomerang buyers to re-enter the market over the next year will be a key bellwether of the long-term health and direction of the U.S. housing market going forward for the next decade, and possibly beyond." ~ Forbes
What's Required of a Boomerang Buyer Before Buying Again
To offer the opportunity to reinstate these individuals to homeownership status sooner than later, the FHA is permitting the application for a home loan by borrowers who have experienced an Economic Event and can document it. FHA proof documents must include the following:
certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control
the borrower has demonstrated full recovery from the event
the borrower has completed housing counseling
Boomerang Buyers May Purchase Homes Recently in Foreclosure
How wonderful it is when something that went "wrong" feels like it is put back in "right" standing!
Forbes made a projection that, "move-up buyers will in turn open up a home for the boomerang buyers to purchase. And although it’s not likely many boomerang buyers will be buying back their former home, it could turn out that they are purchasing homes where the last transaction was a short sale or foreclosure sale — ironically the same event that resulted in them losing their homes". In their article titled FHA Change Adds 2.5 Million Potential Boomerang Buyers Two Years Ahead of Schedule it explains that some buyers who purchased homes in sort sale at deeply reduced prices are shocked to find the have sufficient home equity already built up to empower them to sell and buy another home.
The one-year requirement applies to buyers who complete a Chapter 13 bankruptcy
The "Economic Events" That Qualify To Re-Apply For An FHA Home Loan
Loss of Precious Income:
Applicant needs to provide documentation in one of two manners:
* A written Verification of Employment document, complete with date and amount that income lost and if / when it was re-instated
* Signed tax return(s) or W-2(s) the prove the minimum 20% loss in Household Income
Loss of Employment must be documented by providing the lender:
* A written Verification of Employment (VOE) which clearly states termination date
* In events where the prior employer went out of business, a written termination notice, or another publicly available documentation of the business closure, and a documentation of receipt of unemployment income must be provided.
"As a Realtor, every transaction I’m involved in is a partnership with the buyers and sellers. It is important to see that every client feels confident that they will thrive in their newly purchased home and can afford to maintain it. Foreclosure hurt too many responsible homeowners in the past; it is good news to see new opportunities available for them to step back into homeownership." ~ Jenna Thuening, owner of Home Destination
Boomerang Buyers May Apply To Become Homeowners After 12 Months
You can qualify to purchase a home after a foreclosure, bankruptcy or short sale if you suffered an Economic Event that caused a loss of 20% or more reduction in household income for at least 6 months. FHA recently announced that their guidelines now permit any buyer who had a foreclosure, bankruptcy or short sale may qualify to apply to buy a home again after waiting only 12 months. This is a wish come true for the 4 million former homeowners nationally who lost their home to foreclosure and the millions more who have braved bankruptcy and short sale. The next batch of homebuyers entering the Minneapolis real estate market may be these individuals. The previous news that you have to wait 2 to 4 years or even 7 years is no longer applicable.
New Minnesota Law Become Effective October 31 To Keep Families In Homes
A new Minnesota law prohibits simultaneous foreclosure during loan modification. Under the new law, that practice of "dual tracking" will be prohibited beginning Oct. 31, 2013. Rep. Melissa Hortman (DFL-Brooklyn Park) and Sen. Patricia Torres Ray (DFL-Mpls) sponsor the Minnesota law prohibiting "dual tracking". Hope is that by keeping homeowners out of the Minnesota Foreclosure Timeline, they will never face the title of a boomerang home buyer.
The law applies to owner-occupied residential homes with no more than four family dwellings. "It gives homeowners an opportunity for a loan modification if they are eligible and prohibits foreclosure while they are going through the modification process. If after 14 days of a modified loan being offered, the homeowner has not accepted the offer, and when any appeals have expired, the foreclosure may commence", according the MN House of Representative website.
We put our clients first, making sure that when boomerang buyers try become homeowners again, that they are given their best opportunity to return to the status of homeowners. We love seeing each perspective Minneapolis home buyer gain the home of their dreams. Call me at 612-396-7832.
Jenna Thuening, a Minneapolis residential Realtor brings news that boomerang buyers may become homeowners again 2 yrs earlier.
Eden Prairie MN 55344
Jenna's home page: homedestination.com
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