The Foreclosure Crisis And The Housing Crisis

1172 Words5 Pages
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. In 2007, there were over 1.28 million foreclosure filings. The number of foreclosure filings remained above historical national averages for eight years, growing every year until 2010, when levels capped at 2.87 million. According to RealtyTrac’s 2014 Year-End U.S. Foreclosure Market Report, national foreclosure filings--including bank repossessions, default notices, and scheduled auctions--saw an 18 percent decrease from 2013 to 2014, but still had not reached pre-recession levels. In 2015, nearly 700,000 of boomerang buyers will be eligible for new homes, according to TransUnion. Over the next five years, 2.2 million borrowers will again be eligible for mortgage credit as their seasoning periods expire. These boomerang buyers represent a wave of potential pent-up demand in the housing market that could reshape the housing market. However, so far less than half of recently eligible borrowers have purchased a home. There are several possible reasons for this: they may believe they are not eligible even if they are, they may be reluctant to seek
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