Achieving Homeownership After a Foreclosure: Report

Achieving Homeownership After a Foreclosure: Report

Apparently, if one loses his or her home to foreclosure, the waiting period to qualify for another mortgage can easily be another decade.

According to a report from the Federal Reserve Bank of San Francisco, a mere 10 percent of borrowers with a history showing a serious delinquency were able to obtain a mortgage again within 10 years.

In addition, subprime borrowers, or those with credit scores lower than 650, have an even more difficult time returning to the market.

For borrowers who end their mortgage for a reason other than default, they were able to access mortgage credit about two-and-a-half times faster than those who went into default.

The report was based on analysis using Equifax data in the New York Federal Reserve Bank’s consumer loan file. Mortgages were counted as being in default if they were either 120 days past due or past due and reported to have a charge-off or foreclosure.

The timeline for credit accessibility varied, however, when observing the rate of return based on different years. In 2001, 30 percent of borrowers who defaulted were able to take out another mortgage within 10 years. In 2008, the rate of return was much slower. For example, after almost four years, the rate of return for borrowers in 2008 was about 5 percent, but in 2001 during the same period, it was above 15 percent.

The authors of the report, William Hedberg and John Krainer, attributed the low rate of return in 2008 to lack of demand. In the early 2000s, demand for housing was strong, but following the Great Recession, uncertainty about jobs and income may have caused people to become “unwilling or unable to demand housing,” the report explained.

While borrowers with prior defaults are influenced by conditions such as unemployment and home price growth, the report said, “the best predictor of when a defaulting borrower returns to the market is the change in the borrower’s credit score.”

The researchers found that a typical borrower who experiences foreclosure will have a credit score below 600, no matter what their score looked like prior to the derogatory mark. But after five years, the report said, “borrowers who return to the mortgage market after a default have experienced a more-than-100 point increase in their score.”

With an estimated 4 million foreclosures since 2007, according to the report, the movement toward homeownership will be a gradual one for millions.

In addition, the Census Bureau reported Tuesday the homeownership rate stayed near historic lows at 65.5 percent. In the first quarter of 1997, the rate was 65.4 percent.

In response to the homeownership rate, Capital Economics released a report, authored by Paul Diggle, projecting a worsening rate.

“We think that continued tight credit conditions and plenty more foreclosures could see the homeownership rate fall slightly further yet,” wrote Diggle.

Even though the rate is expected to decline, Capital Economics expects the recovery to be able to continue with investors leading the way.

“Indeed, it’s hard to escape the conclusion that the sustainability of the housing recovery depends on how robust investor demand proves to be. Our view is that, for the next few years at least, institutional and individual investor demand will hold up well,” Capital Economics stated.

Start over after a short sale, foreclosure through Another Chance Nevada

Thousands of Southern Nevada homeowners have found themselves at a crossroads in figuring out where to go and live after turning in the keys to their home due to an unfortunate short sale or foreclosure. Many believe that they have no other choice than to start over as renters and that it will be many years before they can hold keys to their own home again.

New programs now make it possible for qualified Southern Nevadans to re-build their lives in a home of their home by purchasing another home immediately after experiencing a foreclosure or short sale. Among those is the Another Chance Nevada program offered by Las Vegas-based Premier Mortgage Lending.

“For many people who have experienced a short sale or a foreclosure, it’s not a question of ‘if’ they want to be a homeowner again, it’s instead a question of ‘when’ can they buy another home. For many, the answer to that question is ‘now’ through our new Another Chance Nevada program,” Rick Piette of Premier Mortgage Lending said.

“Despite the heartbreak and headache that is often experienced when going through a short sale or foreclosure, many would like to become homeowners again and many would love to buy a home at today’s low prices. They’re looking for a second chance to experience the pride of homeownership plus the tax advantages and opportunity to re-build their equity,” Piette said.

“Another Chance Nevada does just that by re-opening the door of homeownership for those who are re-building their lives after a short sale or foreclosure.”

Through Another Chance Nevada, private and institutional portfolio lenders offer home loans following full-documentation underwriting guidelines. These 15- or 30-year, fixed-rate loans carry interest rates that are typically higher than traditional mortgage rates. At least a 20 percent down payment is required.

Borrowers may close within 30 days from the time of loan approval, and may refinance the loan at any time without penalty.

“Even though the interest rates of Another Chance loan are typically higher than of a traditional loan, the numbers and lifestyle considerations make sense for many,” Piette said. “Through the program, you can enjoy the many advantages of homeownership today and then, when you are able, refinance into a conventional loan without penalty.

“When you sit down and carefully analyze the numbers, in many cases, it actually costs less to buy a home at today’s low prices than to rent. For many who plan to live in the home for many years, it makes good financial sense because as a homeowner you have the opportunity to deduct interest payments from your taxes and to build equity, while as a renter your monthly payment just goes to someone else who can enjoy the tax benefits and build equity at your expense,” he said.

“We recently did an analysis of our actual second chance home buyers that left their prior home and purchased a new home of similar size and amenities. We found that in almost every case, our borrowers had reduced both their payments and their loan balances in half,” Piette added.

An Another Chance loan may be used on purchase of a re-sale or a new home. The lender is currently working with Beazer Homes, D.R. Horton, Dunhill Homes, Harmony Homes, KB Home, Pardee Homes, Pulte Homes and Del Webb, Richmond American Homes, Ryland Homes, and William Lyon Homes.

“The first step that anyone should take when determining if buying a home makes financial sense is visit with an experienced lender and complete the mortgage pre-qualification process, a service that Premier Mortgage Lending offers for free,” Piette said. “We can help you determine not only if you can qualify for a mortgage, but also weigh the monthly mortgage payments and decide if now is financially a good time for you to buy a home.”

For additional information or for mortgage pre-qualification, call Premier Mortgage at 485-6600 or visit www.AnotherChanceNevada.com.

Premier Mortgage Lending (NMLS 393282) is located at 8689 W. Sahara Ave., Suite 100, Las Vegas, 89117 and is a member of the Las Vegas Chamber of Commerce, Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association of Realtors.

Another Chance Nevada Unlocks Doors to Homeownership

Trulia.com real estate listing service’s recent ranking of the Las Vegas Valley as the third best place to buy a home among 50 major U.S. cities has flamed interest among renters and those undergoing a short sale or foreclosure. Many ask the questions:  “Can I buy a home at today’s low prices?” and “Can I have a mortgage payment lower than rent or my previous mortgage?”

Answering these questions can be very complicated and require the weighing of various factors such as one’s finances, credit history, personal goals, and lifestyle considerations. Being proactive and becoming educated in new financing options are key in deciding whether to join the thousands who are buying homes at today’s low prices.

According to Rick Piette of Premier Mortgage Lending, the first step is seeking the guidance of an experienced mortgage professional well-versed in not only conventional mortgages but also new finance programs designed for borrowers with less-than-stellar credit and who have recently experienced a short sale or foreclosure. Among these is a new program offered by the Las Vegas-based, full-service lender:  Another Chance Nevada.

“Deciding whether to buy a home or to rent is a highly personal decision and should be made only after you have all of the facts and fully understand your options. I have met many people who currently rent and agree that this is now a good time to buy a home with today’s low housing prices. However, some are reluctant because they just don’t know if they can qualify for a mortgage or they feel apprehensive of the home buying or mortgage lending process,” Piette said.

“The only way to find out if homeownership makes financial sense for your family is to be proactive and to learn about all of your options. One way to do this is by meeting with a lending specialist at Premier Mortgage Lending, learning about the different mortgage programs, and finding out if you, too, can buy a home through our complimentary mortgage pre-qualification,” Piette said.

“Many people have been happily surprised when they learn that our Another Chance Nevada can help re-open the doors to homeownership to those who have had a recent short sale or foreclosure. For many, an Another Chance loan makes financial sense when they consider today’s housing prices and compare the potential mortgage payment to rent.”

Through Another Chance Nevada, private and institutional portfolio lenders offer home loans following full-documentation underwriting guidelines. These 15- or 30-year, fixed-rate loans carry interest rates that are typically higher than traditional mortgage rates.  At least a 20 percent down payment is required.

Borrowers may close within 30 days from the time of loan approval, and may refinance the loan at any time without penalty.

“Another Chance Nevada offers those who are currently unable to obtain a conventional mortgage the advantages of homeownership today and, when they’re able, the opportunity to refinance into a conventional loan without penalty,” Piette said. “The program has grown in popularity, giving hundreds of Southern Nevadans the choice of where they live.”

An Another Chance loan may be used on purchase of a re-sale or a new home. The lender is currently working with Beazer Homes, D.R. Horton, Dunhill Homes, Harmony Homes, KB Home, Pardee Homes, Pulte Homes and Del Webb, Richmond American Homes, Ryland Homes, and William Lyon Homes.

“I think that it is vital for anyone who is interested in buying a home to visit with us and participate in the mortgage pre-qualification process. We can help you determine not only if you can qualify for a mortgage, but also weigh the monthly mortgage payments and decide if now is financially a good time for you to buy a home.”

For additional information or for mortgage pre-qualification, call Premier Mortgage at 485-6600 or visit www.AnotherChanceNevada.com.

Premier Mortgage Lending (NMLS 393282) is located at 8689 W. Sahara Ave., Suite 100, Las Vegas, 89117 and is a member of the Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association of Realtors.