In 2007, an area housing counseling center in Tampa, Florida was unable to pay the full salaries of its counselors. One of these counselors was Linda Van Doren. However, instead of leaving, she continued working with the center. The most interesting and yet ironical part of it was that she lost her own home after she agreed to a short sale. In spite of all the mounting challenges, Linda kept her faith in homeownership.
With pride, she said that she actually knew what was doing. She stated that she knew that she was eventually going to buy another home at the right time, and that is precisely what she did. But before she was able to become a proud homeowner again, she had to be a tenant for three years. When she finally was able to buy a new home, she did it with the loan that she got from the Federal Housing Administration (FHA).
But Linda is not alone in this quagmire. Since the beginning of the crash of the housing sector, about 7.2 million homes have been lost by their owners who had to reluctantly settle for foreclosure or short sale. This is based on the information provided by the Black Knight Financial Services.
For many of these former owners, they had to rent homes and become tenants. But it seems that for them, this condition is not going to be a permanent one. Many of them are now steadily and cautiously becoming homeowners again, and that is because there is a government program that has been put in place to ensure precisely that. This government intervention is so efficient that they are now becoming homeowners with a very amazing speed.
According to Matt Weaver, a lender working with the Florida-based PMAC Lending Services, they have seen a lot of boomerang buyers. He stated that as a matter of fact, about 20% of his current clients had either experienced a short sale or a foreclosure in the past. But the good news is that many of them are not able to buy back these homes.
What has made this re-buying possible is a novel program that the FHA launched last summer, the body that acts as the government’s insurer of home loans. To be able to apply for this loan, applicants have to show that they have lost a minimum of 20% of their income for a period not less than six months, and that led to the loss of their homes. They also have to display that they were able to recover from that hardship and then maintained a clean credit for a minimum of one year after that. All these loan packages are fully documented and financial status of all the borrowers before going ahead with the entire transaction.
Tim Ryan of Equity Realty, a top Naples, Florida real estate firm notes that the housing-to-debt ratio is still within the normal range but for those who are neck-deep in debts, they will not be able to avail a mortgage. If you want to benefit, you need to have the normal or correct housing-to-debt ration. For borrowers who have met all the outlined parameters, they become eligible for the regular FHA loans. These loans have low interest rates and they require just 3.5% as the down payment. The FHA is yet to collate the precise figures the number of borrowers who have benefited from the program, it is believed at present that it is only a small fraction of former homeowners.