December 14th, 2012
The housing market has been waiting what seems like an eternity for a little sustained momentum, and it looks like we finally have some good news courtesy of RealtyTrac, the leading online marketplace for foreclosure properties.
Their analysis of the third quarter foreclosure statistics shows that the number of foreclosure filings continues to fall and is actually at a five year low, representing the lowest numbers since the housing issues began. The report showed a decrease of 7% from the previous month (September 2012) and down 16% from September 2011. September’s total was the lowest U.S. total since July 2007.
These filings include bank repossessions, scheduled auctions, and default notices. And while some worry that a wave of foreclosures will occur in states where foreclosures that require court approval have been delayed, the overall state of foreclosures in the country appears quite positive.
The second piece of encouraging news is that many families who lost their homes early in the housing market crash are now becoming eligible for mortgages again. Called “boomerang” foreclosure buyers by some in the industry, these families have passed the three year mark set by FHA seasoning a foreclosure, and have now become eligible to get a home loan again under the current guidelines.
According to the Wall Street Journal, this figure may be as high as 729,000 households who are now eligible that went through foreclosure at least 3 years ago.
FHA vs. Fannie or Freddie After a Foreclosure
It’s good to remember that just because FHA says you can get a mortgage with three years history after a foreclosure, that doesn’t necessarily mean you will be approved. A number of factors go into FHA loan decisions, not the least of which is how you’ve handled your credit over the prior three years to re-build it.
Additionally, the guidelines for a Fannie or Freddie loan are much tougher than FHA when it comes to foreclosures, as both Fannie and Freddie require at least 7 years since a foreclosure to be eligible.
If you are one of those family members who lost a home due to the housing crisis, it may be time to come in for a consultation and find out what your options are, as it’s never too early to begin planning for when you might buy another home.
And for the rest of us in the housing market, we look forward to having these prior home buyers back and to the continued improvements of these foreclosure statistics into the new year!