FHFA Gives Homeowners Second Chance To Buy Back Foreclosure Homes
Supporting the growth of the still recovering economy, the Federal Housing Finance Agency (FHFA) is now allowing for thousands of homeowners to buy back their homes at market value.
Homeowners who have once lost their homes to foreclosure are now considered eligible to buy again, according to the FHFA’s new policy change. One of the main exceptions in this case is, as long as your mortgage loan was backed by Fannie Mae and Freddie Mac you may be able to repurchase your previous property at current market value.
In the past, Fannie and Freddie required for their borrowers who were losing their homes to foreclosure to pay the amount that they owed, regardless of it exceeding the current market value. Today, they have revised their policy to make it just a bit more easier for these homeowners to keep their homes.
Nothing can be more stressful than losing your home, and the FHFA understands and have high hopes that if previous homeowners were able to repurchase their foreclosure homes at a fair market price, then that would help relieve the amount of vacant properties across the U.S.. In addition to this purpose, this should help to stabilize the home values in neighborhoods throughout the nation. Foreclosure property volume would go down, and home values would go up.
According to RealtyTrac’s most recent foreclosure report for the month of October, there were a total of 1,054,461 properties experiencing some stage of foreclosure. Of all the foreclosure properties, there are a total of 121,000 homes with loans under Fannie and Freddie. As of October, the current median sales price for non-distressed homes was $200,000, whereas, a distressed home was going for $127,000 (36% less than a non-distressed property).
Unfortunately, the number of homeowners who may be eligible to take advantage of this new policy has not been stated yet. Due to the required wait of three years to be able to buy again mentioned in the policy, many of those homeowners may already have long moved on since losing their properties. The waiting period to buy again in the policy has not been altered, so for eligible homeowners who are looking to take advantage of this exception, non-profit banks may be able to help with financing.
There are non-profit banks who actually buy distressed properties to resell or lease out to its previous homeowners. The prices of these homes sold or rent out by these non-profit banks are usually offered to occupants at the current market value.
For the past few years, millions of homeowners have struggled with mortgage debt and a majority of these borrowers were unable to refinance or sell their properties due to strict policy guidelines. Because of this, many were forced to give up their homes. That is why this new policy that the FHFA has put into place is not only beneficial to the economy, but great for struggling communities nationwide.
At one point the Obama Administration urged on Fannie and Freddie to get on board with the idea of mortgage debt reduction through the Home Affordable Modification Program (HAMP), a foreclosure prevention program. The FHFA during the time feared that its borrowers may get the wrong idea resulting in intentional mortgage loan defaults just to take advantage of a reduced mortgage loan.
There had been discussions in regards to this new policy in the past, but when it would go into affect, no one knew.
Jessica Lucas
