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A new market segment is arising, aptly called the “boomerang” borrower, or those who lost their previous home to foreclosure. These individuals are essential to the housing recovery as they are a growing number of potential buyers, in a market where much of the market segment is either college graduates with limited employment options or baby boomers who are aging. There are millions of previous homeowners who may now qualify to buy a home again, but are unaware of the help that is available to them through existing and new loan programs.

A large percentage of those who lost their homes are interested in buying again and have been able to mitigate their debt obligations, realizing that a larger down payment is necessary to stay in for the long haul and will appeal to those lenders interested in offering financing.

The importance of the “Boomerang” buyer to stabilizing the real estate market has been recognized by the Federal Housing Administration who has recently launched the “Back to Work” program. The implementation of this new financing program allows for a borrower to purchase a new property as soon as twelve months following a foreclosure or short sale, provided that the borrower can prove that their prior default was the result of a financial hardship. “Financial hardship” is strictly defined as an employer-driven loss of at least 20 percent in income for six months or more. (Emphasis added)

While this new program does not help the self-employed, it is definitely a step in the right direction to bringing this market segment back into the real estate market as potential buyers.


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