More than two million homeowners who experienced a foreclosure or short sale during the recession will see those events drop off their credit reports by summer 2017, widening their opportunity to qualify for a mortgage, according to a recent study by Experian.
The study, which analyzed the “boomerang borrowers” who foreclosed or short-sold between 2007 and 2010 and have since obtained another mortgage, reveals 68 percent of the two million-plus homeowners with improving credit are now in a more favorable risk tier—and only 3 percent of those who foreclosed and 1.5 percent of those who short-sold are delinquent on their new loan.
“With millions of borrowers potentially coming back into the housing market, the trends that we’re seeing are promising for both the mortgage seeker and the lender,” said Michele Raneri, vice president, Analytics and New Business Development , Experian, in a statement on the study. “In the coming years, boomerang borrowers will be a critical segment of the real estate market. While many of these borrowers have gone through a very difficult time, it is encouraging to see them taking control of their finances with better credit scores and all-around better credit management.”
The average Vantage credit score of a homeowner who foreclosed during the recession, according to the study, is now 680, up 20.8 percent. The average Vantage credit score of a homeowner who short-sold during the recession is now 706, up 16.5 percent.