NEW YORK â€“ Feb. 26, 2013 â€“ Many former homeowners who walked away from their homes in a â€œstrategic defaultâ€ are back on the market, eager to buy a home again. Owners who go through a strategic default choose to do so, calculating that the financial loss and any resulting hit in their credit report makes more sense than staying in a home that lost value.
Nearly 80 percent of strategic defaulters say they want to buy a home again within the next 12 months, according to a survey by YouWalkAway.com, a website that helps borrowers in the legal pitfalls of strategic default.
The market potential for these comeback homeowners could be huge: The number of eligible home buyers who have a foreclosure on their record will reach 1.5 million by the first quarter of 2014, according to data by Moodyâ€™s analytics.
Borrowers who defaulted on their mortgage during the recent recession may fare better at qualifying for a loan again than those who defaulted on multiple credit accounts and auto loans too, according to a study by TransUnion conducted in 2011.
â€œThere appears to be a pocket of opportunity among mortgage-only defaulters that is not the result of excess liquidity, but rather the unique circumstances of the recent recession,â€ says Steve Chaouki, group vice president in TransUnionâ€™s financial services business unit. â€œThis new market segment that the recession created is an important one for lenders to understand. They have the potential, today, to be stronger and more reliable customers.â€
Still, some comeback homeowners will have to wait. For example, the Federal Housing Administration requires homeowners who faced a foreclosure to wait three years before they can buy again while Fannie Mae and Freddie Mac require up to seven years for a strategic defaulter to wait to apply for a mortgage again.
Source: â€œThey Bailed on Mortgage, but Now Want to Buy Again,â€ CNBC.com (Feb. 22, 2013)
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