Foreclosed Americans Find Way Back to Homeownership

Published May 18, 2012 Reuters

When Jennifer Anderson's family could no longer afford their mortgage and lost their home, she expected many years to pass before they would again become property owners.

But less than two years later, in March, they purchased a $297,000 house outside Phoenix, Arizona, after qualifying for a loan backed by the U.S. government.

They joined a small but growing number of Americans who are making a surprisingly quick return to homeownership after defaulting on their loans or being forced into short sales that cost their banks money.

"We didn't really expect it," said Anderson, 40. "We were resigned to the fact that we were going to be in a rental property for a while."

Financial problems arose after she lost her job as a customer service representative for a health insurance company and her husband's hours at an automaker were cut. To make matters worse, they used up her retirement savings trying to keep their home.

Data is not available, but interviews with more than 30 lenders, builders, Realtors and consumers suggest that a growing number of Americans are getting back into the housing market, even though they went through a foreclosure, bankruptcy or short sale in recent years.

"Most are not ashamed or bashful about what happened because so many people were forced into that reality in the last six years," says Graham Epperson, vice president of sales in Arizona for the PulteGroup, a leading U.S. homebuilder.

They want to escape rising rents and take advantage of home prices, which are down by about a third from an April 2006 peak.

FHA TO THE RESCUE

Much of the comeback wouldn't be possible without help from the U.S. government, namely the Federal Housing Agency. It was created in the 1930s as part of a broader push by Washington to foster home ownership and fight the Great Depression.

The number of FHA-insured home loans has soared in recent years as subprime loans have disappeared and fewer Americans have qualified for conventional mortgages backed by Fannie Mae and Freddie Mac, which were rescued in 2008 by the U.S. government after loan losses.

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