FHA helps rebound buyers get back in homes

The Press of Atlantic City ^ | November 18, 2012 | Alejandro Lazo and Walter Hamilton

[2ndDivisionVet]

After two foreclosures and two bankruptcies, Hermes Maldonado is as surprised as anyone that he's getting a third shot at homeownership.

The 61-year-old machine operator at a plastics factory bought a $170,000 house in Moreno Valley, Calif., this summer that boasts laminate-wood floors and squeaky clean appliances. He got the four-bedroom, two-story house despite a pockmarked credit history.

The last time he owned a home, Maldonado refinanced four times and took on a second mortgage. He put a Cadillac and Mercedes-Benz C300W in the driveway and racked up about $45,000 in credit card bills and other debts. His debt-fueled lifestyle ended only when he was forced into bankruptcy.

His re-entry into homeownership three years later came courtesy of the Federal Housing Administration. The agency has become a major source of cash for so-called rebound buyers - a burgeoning crop of homeowners with past defaults who otherwise would be shut out of the market.

"After everything that happened, thank God I was able to buy another house," Maldonado said in Spanish. "Now, it's good because the interest rates are low and there are lots of homes."

The FHA, which backs nearly 8 million loans, is helping rebound buyers recapture the American dream, boosting the housing market in the process. But that's touched off a fierce debate about the financial and ethical wisdom of bankrolling borrowers who contributed to the last housing bubble - and the potential cost to taxpayers...

[Angry_White_Man_Syndrome]

This pisses me off. We moved for a job from Arkansas to Ohio a year ago. We could not sell the one in Arkansas, so we rented it out. We have not been late a single time even when our renter was several times. We are living in a house under contract to buy it. We have no other debt besides the house in Arkansas.

I have tried to get a loan twice now. First time was told that we had to show that the house in Arkansas was now an income property with stable rent income. Well after a year of having a renter in it, I went back to the bank and they now say we have to have two years of history of stable rent income. We can actually afford both mortgages but the bank says we do not qualify due to not being behind on the house in Arkansas.

[CSM]

It will happen again to him.....