San Diego Housing Market News and Analysis
FHA loans going to "Rebound Buyers" just ~3 years out of foreclosure/BK
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Submitted by bearishgurl on November 14, 2012 - 9:25am
The example shown here is in a very low-cost area in the "remote" IE. HOWEVER, the subject ATM'd his former residence to death before losing it, buying TWO luxury vehicles, discharging $45K in CC debt and then summarily defaulting ....
Besides the obvious risks to the agency (which taxpayers have and will "prop up" when it makes too many of these bad loans), I don't understand what it is that these new "buyers" actually "own," what with FHA's latest hikes this year of its up-front and monthly MIP premiums. They're "buying" but don't really have any "equity." How long will it take for these severely-depressed areas of the IE (where entire blocks are near-ghost towns) to show an increase in value where these ~new owners can sell and get out without having to pay costs of sale out-of-pocket?
It just seems as if the foreclosed-upon and/or ~newly BK'd are choosing to make the same mistake again. That is, they are choosing to be immediately upside-down upon purchase of a new property in lieu of renting. So, what's the point?
At least they won't be able to take "cash out" of their properties for the foreseeable future.
I can't imagine this same group of buyers would be able to consummate a RE purchase in more stable, desirable areas.
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