More than 40,000 people who lost houses to foreclosure or short sales in metro Phoenix during the crash will be eligible to buy again this year. The housing market could use the boost right now.
That tally, which comes from the latest WilcoxReport.com, is based on the three-year waiting period required by the Federal Housing Administration for people who had a foreclosure or short sale. This group of potential home shoppers has a nickname, “boomerang buyers.,” because they were out of the housing market and are coming back faster than expected.
Early in the housing crisis, financial experts estimated it might take up to seven years for people who lost a home through a foreclosure or short sale to qualify for a mortgage to buy again. But FHA and other federal-loan guarantors are lending to boomerang buyers earlier than expected.
Here are some useful facts about federal-agency requirements for boomerang buyers:
FHA: Homebuyers can take out loans for up to $271,060 in Maricopa County. People who went through foreclosures must wait three years and have a 3.5 percent down payment for traditional FHA financing. The FHA Program “Back to Work” can allow financing after 12 months from Bankruptcy/Foreclosure/Short Sale who can show 20% income loss prior to the event and have re-established satisfactory credit.
Fannie Mae: Borrowers can obtain loans for up to $417,000 in the Valley. People who lost a house to foreclosure must wait seven years to qualify and put 10 percent down, unless there was a special circumstance. Former homeowners who completed short sales have to wait two years and have a 20 percent down payment or four years and a 10 percent down payment.
Freddie Mac: Borrowers can take out loans for up to $417,000 in the Valley. Borrowers with a foreclosures on their record must wait seven years unless there’s a special circumstance; , and then the wait is three years. People who went through a short sale must wait four years.
Veterans Administration: These mortgages have the biggest limit, $1 million. Borrowers with a foreclosure only have to wait two years and don’t need a down payment if the mortgage is less than $417,000. Eligible veterans who have done a short sale may not even have to wait for to take out a VA-backed loan.
Fletcher Wilcox, real-estate analyst with Phoenix-based Grand Canyon Title, researches and publishes the WilcoxReport//.com//.