Homeowners Who Bailed On Mortgage During Mortgage Collapse

This BLOG On Homeowners Who Bailed On Mortgage During Mortgage Collapse Was UPDATED On September 24th, 2017

Residential home sales has been steadily increased and so has real estate prices.

  • Investor demand has been increasing more so this year than in the past several years and so has consumer confidence in the housing market. 
  • Many of previous homeowners who have walked away from their mortgage loans due to the real estate and credit collapse are returning back to the housing market.

Those Who Bailed On Mortgage Loans Are Coming Back With Damaged Credit

Those who have bailed on mortgage loans, whether they bailed on mortgage loans due to a loss of job, loss of business, divorce, or because they were so upside down on their mortgage loans, are coming back strong back to the housing market with damaged credit.  Almost eighty percent of those homeowners who bailed on mortgage loans expressed interest in buying a home now or within the next year according to Moody’s analytics research poll.  The study also shows that the eligible potential home purchasers who had a prior foreclosure will reach 1.5 million by the beginning of 2014 first quarter.

Financial, Real Estate, And Credit Collapse Of 2008 And Those Who Bailed On Mortgage Loans

Nobody wants intended on bailed on mortgage loans.

  • Reason folks bailed on mortgage loans were due to plummeting housing values,
  • Many had mortgage loan programs that had teaser rates.
  • After the teaser rate period expired, homeowners saw their monthly mortgage payments spike up as much as double their original mortgage payments. 
  • Some homeowners have fought tooth and nails to save their homes.
  • Even though the value of their homes was much less than the amount they owed on their mortgage loans they tried to make their payments but to no avail. 
  • They realized that the chances were not good in seeing the likelihood of seeing their lost equity back again for many years to come. 
  • They saw being bailed on mortgage loan as being morally reprehensible. 
  • Others who had stable income and who could have afforded paying on their mortgage loans.
  • They saw that bailing on their mortgage loans was the most sensible business decision they could make.
  • They took the risk on hurting their credit and taking their chances on rebuilding and re-establishing their credit on buying a home at a later date.

Home Ownership In America

Home ownership in the United States has fallen from a high of 69.2% back in 2004 to a low of 65.2% in the beginning of 2013 according to data from the United States Census Bureau.

  • Americans still believe in the American Dream of owning their own home and home ownership. 
  • A recent poll by U.S. Today about home ownership states that over 72% of Americans still have the belief that home ownership is part of the American Dream.  
  • Recent FHA and Fannie Mae Guidelines make home ownership possible for those who have had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale as well as prior bad credit. 
  • A home buyer can now qualify for a FHA mortgage loan with a credit score of 500. 
  • For those with credit scores between 500 and 579, a 10% down payment is required. 
  • For those home buyers who have limited funds to apply towards their down payment, a credit score of 580 or higher is required. 
  • I specialize in bad credit mortgage loans and can qualify home mortgage loan borrowers with prior bad credit, open collections, judgments, tax liens, and recent late payments. 
  • The Gustan Cho Team at USA Mortgage are mortgage lenders who have no overlays and can also do manual underwrites.

As Long As Mortgage Borrower Has Documented Income, They Can Qualify For Mortgage Loan Even With Low Credit Score

Home ownership is possible to anyone who has a job or documented stable income.

  • Borrowers have had prior credit issues and a low credit score but have a stable job, I can get you qualified for a mortgage loan. 
  • Over 50% of my business is handling mortgage loan applications where the mortgage loan borrower has gotten rejected by a bank or mortgage banker. 
  • As long as you meet federal guidelines such as passing the necessary waiting period after a bankruptcy or foreclosure and are current on all of government loans such as student loans, I can get borrowers qualified for a mortgage loan. 
  • I work with many bankers and other mortgage bankers who have clients that have open collections and/or late payments after a bankruptcy or foreclosure where their mortgage company cannot qualify the mortgage loan client. 
  • They refer those mortgage loan borrowers to me and most of the time, I get them approved and closed in 30 days or less.

FHA Back To Work Extenuating Circumstances Due To An Economic Event

The HUD FHA Back To Work Extenuating Circumstances mortgage program has been discontinued. However, we are leaving this article live for archival purposes. NON-QM Loans are mortgage loan programs that do not require any waiting period after the following:

  • Bankruptcy
  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale

HUD’s new Back to Work Extenuating Circumstances FHA mortgage loan program now allows a minimum of a one year waiting period after a mortgage loan borrower has been discharged from a bankruptcy or had a foreclosure.

  • There are specific guidelines for a mortgage loan borrower to qualify for this program which I will cover in other blogs but a bailed on mortgage loans will not apply here.
  • Mortgage loan borrowers must have been unemployed or had a reduction of at least a 20% reduction in household income for them to qualify.
  • Foreclosing on a home, deed in lieu of foreclosure, or short sale because the property was underwater does not qualify for HUD’s Back to Work Extenuating Circumstances FHA mortgage loan programs.

Mortgage Lenders do not view those who bailed on mortgage favorably.

Gustan Cho NMLS ID # 873293

Related> 2015 Waiting Period After Bankruptcy And Foreclosure

Related> Waiting Period To Qualify For Home Loan After Foreclosure

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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