The Economic Financial Crisis Of A Lender

However, hope might be on the horizon for the victims of the mortgage disaster of 2007/2008. Home buyers who were foreclosed upon years ago, or boomerang buyers, are beginning to be eligible to buy homes again. While some feel hope after feeling bamboozled by lenders and Fannie Mae and Freddie Mac, some feel anxious and fearful of the thought of buying again. Yet there are lessons that have been learned by the mortgage meltdown. Fannie Mae and Freddie Mac provided a lesson for the

to be approved for a mortgage. Some of these home owners may have walked away from their

In the new system, Fannie Mae has also allowed buyers to mortgage homes for 3 percent down, if the buyer has good credit and does not have enough money to close the deal.

Since this paper only touches upon the basics of this plan, it will only explain three priority groups (keeping in mind that various subgroups can be created for a broader variety of situations). The highest priority group (Group A) must meet the requirements that follow. Homes must have been bought before January 1st, 2009, and the loans must have been financed by Fannie Mae or Freddie Mac. Borrowers must be current on their payments, and must not have missed a payment for one year before requesting the refinance. The group with the second highest priority (Group B) could have purchased their home either before or after January 1st, 2009. However, if the loan was taken out after the date, residents must wait one year (with no missed payments) to apply. Those who qualify for Group B must not have any delinquencies yet, but they can have missed two payments at the most. Therefore, while they do not have to be current on their payments, if they exceed missing two payments, resulting in a delinquency, they must be eligible for Group C. This lower priority group must have a delinquency, before or after the bank starts the process of foreclosure. This group would need to be behind on their payments, missing at least three. While all of these groups are eligible for a refinance, Group A will be able to refinance for the greatest volume of customers at the highest loan

potential homeowners to purchase their own homes. Loans that had at one point been impossible

When the housing bubble burst in 2007, 7.3 million borrowers lost their homes due to foreclosure or short sale. These “boomerang buyers” are slowly but surely recovering from financial setbacks and reentering the housing market. Conventional lenders have seasoning requirements that prevent buyers from obtaining a new mortgage until they have repaired their credit: a seven-year window for foreclosures and four years for short sales.

When the Stock Market crashed in the late 2000s, millions were forced to leave their homes by means of foreclosure. Now, after many hardships, the economy is on the rise; and the housing market is making a comeback. Its previous victims are beginning to recover and start fresh in this young economy. The low interest rates and surplus of homes have made the once expensive houses more affordable to those who are seeking to restart. Although these “boomerang buyers” are able to afford these homes, their past record of foreclosure has hurt their credit score which makes it difficult to acquire loans in this cautious market. However, there are several steps such people can take and many methods they can

Owning that little home on the corner with the white picket fence and big oak tree in the front yard has always been the American dream, but for some unfortunate home owners hit by the recession and housing crisis several years ago, it now seemed more like a nightmare. Imagine, after years of hard work, finally having your very own home only to have it ripped out from under you through foreclosure or short sale. This very scenario happened to countless thousands in towns across the country.

Trying to own a home again after foreclosure can be scary, not only to the prospective applicant, but also to the creditor. We all know that bad things happen to good people from losing a job due to a company relocation or an unexpected illness or accident that causes excessive absences. Fortunately, there are people (ie: creditors, loan officers, etc.) that understand and will assist someone to regain home ownership.

The sounds of elation by all sides of the business are what everyone involved in the post housing market crash is saying these days. The age of the foreclosure and short sale (“when a house on the market is worth less than the seller still owes for it”) is slowly coming to an end as buyers and lenders are more aware of the changing factors in today’s real estate market (Momberger). The previous method that lenders used helped cause the housing crash and a higher level of home loan defaults. Before the housing crash many buyers entered their housing purchase having some debt and often would refinance to pay off debts and use the increasing value of the house they purchased to pay them off. The new ways of qualifying buyers and assessing a homes

Another benefit that comes along with this option is the flexibility it provides for the buyers. The owners whom are leasing the house to these buyers will not discredit them because of their bad past credits. They will simply continue their agreement with the buyer if they see that payments are being made when they are supposed to.

Since the foreclosure I have thought long and hard about trying to buy another house and what would my steps I would take. However, the thoughts of foreclosure have loomed over my head and made me have my doubts about ever being a homeowner ever again. Foreclosure is a very scary thing and to be honest at times it is a very embarrassing moment of your life. It’s not something that you want to announce to the world and sometimes the stresses of dealing with the foreclosure is too much. I have known people who have given up all hopes after going through a foreclosure. Having a foreclosure on your credit report is very discouraging especially after knowing that you fought so hard to try to keep your house being foreclosed.

Today’s “boomerang buyers” are a product of the housing market crash that began in 2006 and left millions of homeowners in negative equity situations. Home values nationwide plummeted 25-30% by January 2009 and an estimated 5.3 million people found themselves in a foreclosure or short sale situation between 2007 and 2013. Although current home prices remain 17% below peak 2006 levels, the real estate market is showing signs of recovery as evidenced in the upward trend of prices over the last three years [CoreLogic, 2014]. According to John Burns Real Estate Consulting, boomerang buyers who lost a home to short sale or foreclosure were projected to make up about 10% of all real estate sales in 2014. Returning boomerang buyers may now be faced with difficulty acquiring a loan due to their previous real estate history, damaged credit, or limited capital due to recent financial burdens. Despite the obstacles, there are feasible financing options that will help potential buyers achieve their goal of homeownership.

In early 2008, policy-makers in the United States needed to deal with the frightening after-effects of what had appeared to be a glorious housing boom. The most immediate problem was a wave of foreclosures, which a Senate report predicted could reach 2 million by the end of 2009. Lawmakers sought to relieve the resulting pain and to preserve the longstanding dream of raising the US homeownership rate. Amidst a sea of lawsuits and recrimination, they needed to figure out where the US system for financing home purchases had gone wrong and how it could be fixed. To do this, lawmakers needed to understand what had happened, particularly because housing had until then seemed

One of the first indications of the late 2000 financial crisis that led to downward spiral known as the “Recession” was the subprime mortgages; known as the “mortgage mess”. A few years earlier the substantial boom of the housing market led to the uprising of mortgage loans. Because interest rates were low, investors took advantage of the low rates to buy homes that they could in return ‘flip’ (reselling) and homeowners bought homes that they typically wouldn’t have been able to afford. High interest rates usually keep people from borrowing money because it limits the amount available to use for an investment. But the creation of the subprime mortgage