Based on a report recently issued by the Federal Reserve Bank of San Francisco, only 10 percent of borrowers who has a credit history with sever delinquency were able to qualify for a mortgage again within 10 years.
This indicates that if a homeowner was foreclosed on, it can take another decade for him or her to become a homeowner again.
What is worse is that, if the homeowner has credit score lower than 650, he or she might have to wait even longer to become eligible again.
For homeowners who terminated their mortgage for a reason other than being foreclosed on, their rate of returning to the market is about two and half times quicker than the ones who were foreclosed on.
One of the ways to terminate the mortgage without facing Foreclosure is negotiating a Short Sale with the borrower’s lender. Doing a Short Sale vs. a Foreclosure will allow the homeowners to be able to own another home for as soon as within 2 years if the homeowners are diligent about improving their credit score immediately upon the Short Sale is complete.
In 2001, about 30% of borrowers who defaulted on their mortgage were able to qualify for another loan within 10 years. Comparatively, in 2008, only 5% of the homeowners were qualified for a mortgage within 10 years. This is report were issued by William Hedberg and John Krainer. They have indicated that cause of this phenomenon is due to a low demand in housing in late 2008 due to job depression and income loss.
With an estimated 4 million foreclosures since 2007, according to the report, the movement toward homeownership will be a gradual one for millions.
The Census Bureau reported the homeownership rate stayed near historic lows at 65.5 percent compared to the first quarter of 1997, the rate was 65.4 percent.
Capital Economics released a report by Paul Diggle which projects a further declining rate.
“We think that continued tight credit conditions and plenty more foreclosures could see the homeownership rate fall slightly further yet,” published by Diggle.
Despite the declining rate, Capital Economics predicts the recovery to continue with investors paving 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.
We, here, at Oyezz Real Estate, specialize in helping our clients who defaulted on their mortgage the realization of homeownership much quicker than if the homeowner actually faced a Foreclosure by using a technique called Short Sale. Short Sale is a no brainer for people who are facing Foreclosure. Please visit our website at www.oyezz.com for more details on Short Sales.