Homeowners who once lost their home to foreclosure have returned to the market, eager to buy once again.
These “boomerang buyers” could make up a large number of the future housing market, considering their numbers. Since the housing crash, 4.8 million borrowers have lost their home to foreclosure and 2.2 million did a short sale, according to RealtyTrac data.
As these borrowers get their finances in shape, repair their credit scores, and save up for a down payment, they’ll be looking to buy again, but their struggle will be over when they’ll be eligible to buy again.
Fannie Mae and Freddie Mac require those who once defaulted on their mortgages to wait five years and have a minimum of a 680 credit score and a 10 percent down payment. If they don’t have all that, they’ll have to wait seven years to qualify again. By seven years, a foreclosure is removed from a person’s credit report.
But if a defaulter can show the foreclosure was due to a hardship – like losing a job or illness – the wait may be reduced to two or three years.