May 22 (Source: The Fresno Bee By BoNhia Lee) – The sting of foreclosure is slowly starting to heal for some of the thousands of Central Valley homeowners who lost their houses during the recession.Local housing agencies are shifting their focus from foreclosure prevention to helping families rebuild credit. Real estate agents and mortgage brokers are counseling clients about ways to re-enter the housing market.
And now, many families who lost homes to foreclosure or short sale — in which the lender agrees to allow a house to be sold for less than the debt on the property — are house shopping again.
Nick Barayuga, manager and senior loan officer at Guarantee Home Loans in Fresno, has been getting phone calls and emails daily over the past six months from foreclosed families who want to know how they can qualify to buy a home again.
He recently got a mortgage loan approved for a buyer who successfully increased her credit score and saved enough money to buy a house only three years after a foreclosure.
“It’s not a life sentence that you can never buy a house again,” Barayuga said. “A lender is going to look at your past history. If there have been no problems [since the foreclosure], then you’re not at risk anymore.”
For some, he said, the time has come to become homeowners again.
“Somebody can realistically enter the market three years after a foreclosure, and once they realize that, they get very excited,” Barayuga said. “This is one of the most affordable times to get back in a house, so you’ve got people who lost houses that have been waiting for that opportunity.”
Rebuilding credit is one of the most important steps of the recovery process.
A foreclosure will stay on a homeowner’s credit report for at least seven years, but foreclosed homeowners can improve their credit score in just a few years, said Cara Pierce, housing financial specialist at ClearPoint Credit Counseling Solutions, a Fresno nonprofit organization.
“You want to show the lender that you have the ability to manage your credit going forward,” Pierce said.
That’s what Gloria and John Romero of Tulare are trying to do. They just used this year’s income tax return and money from their savings to pay off $8,000 on three credit cards that once totaled $20,000. They hope to improve their credit score so that they can buy another house.
“I think that paying off the credit cards was a big plus for us,” said Gloria Romero, who sold her home in a short sale to avoid foreclosure. “Hopefully, in two or three years we’ll be able to get another home.”
The last time the couple checked, before paying off the cards, their credit score was 525. Anything lower than 600 is considered high risk for lenders, but the two expect to break that barrier. A score of 700 or more would be a good sign of financial health, but financial advisers say a 640 can be good enough to buy a house.
The Federal Housing Administration allows homeowners to qualify for a mortgage only three years after a foreclosure if their credit score is at least 640 and they have at least a 3.5% downpayment.
ClearPoint and other housing counseling agencies such as the Fresno Housing Alliance and Aspera Housing are holding foreclosure and recovery workshops in Fresno to help families struggling to recover.
The number of people affected by the housing bust is daunting. Since 2007, about 19,302 foreclosed homes in Fresno County were sold at auction to a bank or a third party, which usually is an investor, according to ForeclosureRadar, which tracks foreclosure activity.
At the recovery workshops, counselors will work with families to plan ways to pay down debt and save money for a deposit on a rental house or apartment after foreclosure.
They also will direct families to community organizations that can help counsel them through the grieving process and apply for financial public assistance if needed or even a job.
“It’s not the end of the world,” Pierce said. “Acceptance of the situation is key. And what’s important now is what you do going forward.”
Source: The Fresno Bee By BoNhia Lee
The reporter can be reached at email@example.com or (559) 441-6495.
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A service of YellowBrix, Inc. Publication date: 2011-05-22