Listing Courtesy of LONG AND FOSTER-BETHANY
There is a seven-year window for some past Sussex County homeowners—and it’s one that’s opening, not closing. The ‘window’ in question is the one that could activate Frankford "Boomerang Buyers"—which would come as good news for the local home sales.
Some background about Boomerang Buyers. It’s a term coined in the wake of the subprime mortgage fiasco, describing those burned by the housing crisis. They were, on the whole, Baby Boomers and GenXers who were caught up in the Great Recession. For many who became enmeshed in the effects of the nasty confluence of the cliff-dive of the subprime mortgage bond market and collapse of residential valuations that swept the nation, foreclosures or short sales became, literally, offers they couldn’t refuse. Not only did the bitter aftertaste leave many with a spoiled appetite for homeownership, but the damage done to the credit ratings of millions made that a moot point: they had fallen off the scale when it came to qualifying for a new mortgage.
But that was then; this is now. It’s a now that, in RealtyTrac Newsroom’s breathless phraseology, "the first wave of…homeowners who lost their home to foreclosure or short sale during the foreclosure crisis are now past the seven year window they conservatively need to repair their credit and qualify to buy a new home."
Soon, more and more Boomerang Buyers in Frankford will be in the clear, if they choose to be; and they are only the first wave. "Nearly 7.3 million potential boomerang buyers nationwide will be in a position to buy again from a credit repair perspective over the next eight years," says Newsroom. Bankrate, the mortgage and financial advice website, sees the group as particularly well-qualified. They quote a broker in North Carolina to that effect: "If you’ve been through a foreclosure, you’ve already been a homeowner…you know the process. You’ve been through hell sometime in the last seven years…"
That word ‘sometime’ is apt, because the seven year period has been anything but uniform. Guidelines for that "waiting period" have sometimes been three years for FHA qualifiers, or even shorter for portfolio loans that lenders keep on their own books. But whether it’s three or seven years, the clock usually starts ticking only when a foreclosure has been completed. But according to FICO, although a foreclosure remains on a credit report for seven years, "the negative impact will fade as time passes."
For potential Sussex County Boomerang Buyers still waiting for a foreclosure to disappear altogether from their credit reports, there are other routes that can lead to a homeownership reboot. For more on buying or selling, I’m always pleased to sit down and discuss some of the great opportunities in our current market!
If anyone involved in Sussex County real estate were to try to pick a word to characterize the mortgage industry as a whole, “sentimental” wouldn’t be among them. Especially over the past several years, “frustrated” might be apt, or “hog-tied.” Mortgage issuers been hampered by tough rules developed in reaction to the sub-prime mortgage mess. They certainly wanted to issue more mortgages, if only for their own profitability, but until recently, the lending guidelines made that difficult.
In any case, this is an industry that relies on hard facts and statistics to govern lending decisions. Mortgage industry leaders are therefore not inclined to be overly optimistic, overly pessimistic—nor are they prone to exaggeration in their public pronouncements.
So when the powers-that-be at Fannie Mae come out each quarter with their Mortgage Lender Sentiment Survey, the “sentiment” is not the Cry Me a River or You Are the Sunshine of My Life variety. This “sentiment” describes how real estate lenders (presumably including some Sussex County mortgage companies) feel about mortgage business prospects in the coming months. The actual report has a remarkable record of a lack of sentiment: it’s usually pretty much on target.
So it is that when the 2015 first quarter Survey appeared last month (this is one real estate report whose ‘first quarter’ paper actually appears in the first quarter), it sounded another positive note in the assemblage of springtime real estate projections. The summary talked about “an improving outlook among mortgage lenders” because those surveyed “expect mortgage demand…to grow over the next three months.” The hard number was 71% having that expectation, which wouldn’t be surprising, given our entry into the busy spring selling season. The optimism drew more from the fact that this is a substantial improvement compared with the same quarter 2014 (71% vs. the previous 59%).
If the growth they anticipate holds true for our own market, it wouldn’t just indicate improving activity for Sussex County home buyers and sellers. After what they viewed as an “uneven” 2014, Fannie Mae’s Chief Economist Doug Duncan said the results were “consistent with our view that an improving economy, strengthening employment, and increasing consumer confidence” pointed to the more cheerful outlook.
Also cheerful was the picture mortgage issuers expected for their own well-being. A year ago, lenders who thought their profitability would increase were in the extreme minority: 21%. This year, the size of the optimistic group doubled.
Local mortgage applicants could find good news in one more of the reasons for the expectation for mortgage demand to grow over the next three months. The report talked about how last year’s credit tightening was continuing to “trend down.” And there at the top was the headline which mentioned “Gradual Credit Easing.” For anyone who had found it hard to qualify under last year’s rules, that’s very welcome news.
If you will be buying or selling anytime soon, I hope you’ll give me a call: the sentiment here is also the green light kind!