“A boomerang buyer is a former homeowner who has gone through a short
sale, foreclosure or bankruptcy in the
past few years and has been saving for
the downpayment and awaiting the expiration of the waiting period in order to
qualify once again for a mortgage.”
Source: Nevada Housing Division
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Most observers believe that an improving economy and a strong real
estate market will be the main drivers behind the purchase market this
year and probably into 2018, as well.
As the market shifts from refinance to purchase, mortgage companies
and lenders of all types and sizes will be re-examining their business models in an effort to grow their businesses beyond borrowers who fit neatly
into the Qualified Mortgage (QM) loan “box,” and who will be easy to identify, qualify and close.
The keys to success will be finding niches where originators can add value — and make money — by identifying underserved and under-marketed
borrowers, and figuring out how to serve those borrowers efficiently.
Originators shouldn’t need to look far to find several underserved niches. Since the financial crisis began in September 2008, for example, there
have been approximately 6. 4 million completed foreclosures nationally,
according to CoreLogic.
Over time, these foreclosures — and short sales and bankruptcies —
get expunged from credit reports, making these “boomerang borrowers” eligible for new mortgages. In fact, Experian estimates that by June
2017 approximately 2.5 million boomerang borrowers will be candidates
for new mortgages. Who will step up to help these borrowers?
Another group that needs help is young
renters. For the past few years, rent growth
has outpaced home-price appreciation in
many markets, making homeownership more
attractive to younger, first-time borrowers.
Many of these borrowers, however, are struggling with downpayments and debt ratios
inflated by student debt, which makes it hard
to qualify them for mortgage loans. They will
need the guidance of seasoned professionals.
Finally, the last groups that are often hard to
fit neatly inside the QM box are self-employed
or commission-based professionals and bor-
more opportunities for originators who are
comfortable working in the non-agency, non-QM origination space.