This is a reprint of an article in the San Diego Tribune
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Foreclosed? Maybe you can buy again
Home ownership remains goal for many who went through foreclosure, short sale during recession
When Chad Sanfillipo got the keys to his house in Ramona last year, he had come full circle in the real estate market.
After losing his home to a short sale during the crash of the housing market, Sanfillipo was once again an owner.
“It felt so exciting to be able to buy again, to have something I own,” said Sanfillipo, 45, who rented for a couple of years before a bank would lend him money again. “There’s no landlord or rent check. I get to say what I get to do with my house.”
Sanfillipo, a systems engineer, is one of roughly 116,000 San Diego County residents who had either a short sale or foreclosure between 2006 and 2014, before and after the Great Recession, according to CoreLogic, a real estate data company.
The good news for Sanfillipo and others who lost their homes during the downturn is that there’s ultimately forgiveness in the lending market. Each month, thousands of San Diegans who went through short sales or foreclosures are completing waiting periods that render them eligible to once again apply for government-backed loans. In the worst case, some must wait seven years, but others can get new loans in just one, depending on whether they go through the Department of Veterans Affairs, Federal Housing Administration, Fannie Mae or Freddie Mac.
People who lost their homes during the recession but own again are called boomerang buyers, and they’re becoming a larger part of the market.
“The scales have tipped,” said Mark Goldman, a loan officer at C-2 Financial and real-estate lecturer at San Diego State University. “Instead of having the majority of properties be distressed sales, the formerly distressed sellers are coming in as buyers who are recovering, so not only is the market recovering, the buyers are recovering.”
Boomerang buying is becoming a nationwide movement. The National Association of Realtors says that 9.3 million homeowners underwent foreclosures between 2006 and 2014. Already, 1 million of them purchased homes again, and an additional 1.5 million will become eligible over the next five years.
California has the biggest share of potential boomerangs, with 1.68 million foreclosures and short sales from 2006 to 2014. Already, 250,000 of them are once again property owners, the association reports. Through 2023, that number is expected to increase by 308,000.
Ken Fears, the association’s director of housing finance and regional economics, said California is leading the way not only because of its sheer size, but also due to its unique economic factors during the downturn: A steep run-up in prices followed by a sharp drop in employment.
“There were much larger foreclosures and short sales in that region,” Fears said. “It creates an opportunity today with more of these former short sellers and people foreclosed to return to the market.”
Generally speaking, Fannie Mae and Freddie Mac won’t back a loan for someone who had a foreclosure within seven years, or a short sale within four years. There are exceptions that reduce the waiting periods, but they apply only if someone can prove that extenuating circumstances affected their ability to pay.
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