The past seven years have been horrendous for millions of homeowners who lost their homes. Somewhere between 7 and 8 million homes were lost. The majority of homes lost to foreclosure were around 6 million. These were mostly due from distressed homeowners who suffered hardships ranging from losing their jobs to serious health issues. Around 2 million homes were sold as a short-sale (sold for less than what was owed) and given back to the lender by a deed-in-lieu (DIL) that allows the homeowner to give back the title to the lender releasing the borrower from most or all the indebtedness associated with the defaulted loan.
A typical foreclosure will remain a negative impact on your credit report for seven years. The first wave of homeowners who lost homes seven years ago are being dubbed “boomerang buyers”.
The National Association of Realtors (NAR) made a lot of noise calling this the “Seven Years Anniversary of the Great Recession”. NAR believe approximately 1.5 million eligible boomerang buyers will be re-entering the housing market. Other analysts predict as many as 3 to 5 million boomerang buyers will purchase another home between 2016 and 2022. The boomerang buyers will most probably be very careful and much smarter, especially those who were victims of predatory loans that were so prevalent a few years ago.
The Federal Housing Administration (FHA) allows borrowers to purchase a home three years after foreclosure, if they’ve had a clean credit since the foreclosure. Veteran’s Affairs (VA) loans can have just a two-year waiting period. Some banks and lenders will allow boomerang buyers to purchase a home within 2-3 years of foreclosure.
Time periods can be shortened if the borrower can prove extenuating circumstances led to the previous foreclosure. Again, job loss, serious health issues or death of a spouse are considered extenuating.
Rebuilding your credit score is a must. Keep all your other credit obligations in good standing and your credit will begin to mend in as little as two years. As reported by Fair Isaac Corporation (FICO), the seven-year mark doesn’t necessarily mean a huge difference in your credit score but a consumer who filed for foreclosure with a score around 680 could see that score restored in as little as three years.
The real estate rental market is hot now and expensive. In general, owning a home is much cheaper than renting. Further, the former homeowners are finding once they fill out an application to rent, they’re rejected due to the foreclosure or eviction. It’s no wonder many of these post-foreclosure consumers are anxious to rebuild their lives with owning a home again.
If you’re facing possible foreclosure, seek a qualified foreclosure defense attorney to help guide and assist you through the many alternatives available instead of foreclosure. There are options that won’t show as a negative on your credit report. Our Denver, Colorado foreclosure lawyers can assist with any foreclosure related issues, including defense, home retention, credit building, or home purchases. For more information, visit our Colorado foreclosure defense attorney webpage.
Gantenbein Law Firm also practices Business Law, Real Estate Law- including homeowner rights against HOAs in Colorado, Tax Law and Wills & Trusts, Estate Planning and Probate Law. For more information, or to schedule a consult with a lawyer to review the best options for your case, please call 303-618-2122, or visit www.gantenbeinlaw.com. From our office in Denver, we serve clients throughout Colorado.