Natalie's Blog The latest in Real Estate and Fine Living

Foreclosures and Short Sales

Foreclosed Borrowers May Get Loans Again

Will people who currently face foreclosure or short sales who walk away from their underwater properties ever be able to get financing to buy another home down the road?

Banks haven't been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.

Because bankrupt owners have eliminated their debts, they should "constitute attractive fodder for mortgage lenders," says University of Michigan law professor John Pottow, whose specialty is bankruptcy.

As home prices and the mortgage market stabilize, lenders will be motiv®ated to lend to people who previously had financial troubles if they look like they can pay they next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.

"The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack," Riegler says.

SOURCE: Inman News, by Matt Carter (03/05/2010), as published by the NATIONAL ASSOCIATION OF REALTORS®