Andreea Stucker thought she made a good investment when she bought a Huntington Beach condo with her boyfriend in December 2005.
But then she and her boyfriend split up. He moved out just as the housing market crashed, leaving Stucker broken hearted and broke.
Andreea Stucker with her dog, Gus, and her new home in Huntington Beach. She previously lived in a condo that she sold as a short sale.
MARK RIGHTMIRE, ORANGE COUNTY REGISTER
Here's a breakdown of waiting periods for boomerang buyers who lost their homes due to a foreclosure or a related event:
Foreclosure:
- Seven years for a government-backed Fannie Mae or Freddie Mac loan.
- Three years for a Federal Housing Administration (FHA) loan.
- One to two years for a FHA loan if there were extenuating circumstances (such as illness or death of a wage earner).
Short sale:
- Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
- Four years for Fannie Mae or Freddie Mac with 10 percent down.
- Two years for Fannie Mae or Freddie Mac with 20 percent down.
- Three years for an FHA loan.
Deed in lieu of foreclosure:
- Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
- Four years for Fannie Mae or Freddie Mac with 10 percent down.
- Two years for Fannie Mae or Freddie Mac with 20 percent down.
- Three years for FHA.
- One to two years for FHA loan with extenuating circumstances.
Source: Fannie Mae, Department of Housing and Urban Development
With her own income down at least 60 percent, the real estate agent was unable to make the $4,400-a-month mortgage payments on her own, even after taking in room-mates.
"I begged the bank for over seven months to grant me a loan modification to reduce my payments, because I was rapidly going through my savings," Stucker, 34, recalled. "I ended up completing a short sale on my home, and my credit took a huge hit."
Three years later, Stucker has mended both her heart and her credit score. She has a new husband and, "miraculously," a new house.
Stucker is among the emerging ranks of boomerang buyers -- people who bounce back from foreclosures or short sales to become homeowners again.
Generally, buyers must wait at least three years after a foreclosure or short sale to qualify for a government-backed Federal Housing Administration mortgage. It can take seven years to get a conventional loan backed by Fannie Mae or Freddie Mac.
It's been 4 1/2 years since the foreclosure crisis peaked, and real estate industry observers say they have seen boomerang buyers gradually returning to the Orange County market for at least a year.
"I think over three-fourths of these folks will take a stab at the comeback trail," said Paul Scheper, division manager for Greenlight Financial in Irvine. "Even though some are coming off a bitter experience, most will be looking to regain the American Dream."
Three to five people who went through a foreclosure or short sale show up each month at homeownership courses offered in Santa Ana and Irvine by the
Consumer Credit Counseling Service of Orange County, or up to 20 percent of the attendees, said Sahara Garcia, the agency's director of education. She first noticed the boomerangers in late 2011.
"They're out there," Garcia said.
Kicked when you're down
After 3 ½ years, Stucker still cries at the memory of losing her Huntington Beach condo.
She and her ex-boyfriend paid $613,000 with no money down for a two-level condo with cathedral ceilings and skylights, two bedrooms, two bathrooms and a spacious loft less than two miles from the beach.
They spent $40,000 more installing granite countertops, hardwood and travertine floors, new bathroom vanities recessed lighting and other upgrades.
But it turns out that the real estate game isn't just about location, location, location. It's also about timing.
By December 2005, Orange County home sales had just headed into a three-year nose dive. Home prices soon would follow.
Stucker's income as a real estate agent dropped. Her boyfriend moved out after five months. Eventually, she depleted $29,000 in savings, then quit making house payments.
Unable to get a loan modification she could live with, Stucker sold the condo in May 2009 for $425,000 -- $188,000 less than what she owed on two mortgages.
Her credit score went from 798 in December 2005 to the low 500s by May 2009.
"It was probably nine months that I fought for that home," Stucker said. "I loved my house, and I wanted to stay."
In hindsight, she says she should have cut her losses before dipping into her savings. But she kept thinking the market would turn around, and she'd be able to afford the home again.
"It's like getting kicked when you're down," Stucker recalled. "You're going through this awful breakup with this person you thought you had a future with, (and) your income is crap even though you're working full time. ... It was tough."
Road to redemption
More than 33,000 Orange County households now potentially could qualify for an FHA loan because it's been three years since their short sale or foreclosure. In the nation as a whole, more than 3.4 million households have completed the minimum waiting period.
But many people still do not have the money or sufficient credit to get a loan.
Natalie Lohrenz, the Credit Counseling Service's director of development and counseling, said there are two types of foreclosed homeowners.
Those who had a bad loan they couldn't afford. And those whose finances got nuked.
The first type couldn't make their house payments, but still had enough income to stay on top of their other bills.
The second – because they went through a divorce, illness, job loss or business reversal – basically ended up with nothing, and trashed their credit across the board.
Stucker fits the first category, and her story serves as an example of how people can recover from a housing market wipe out.
She followed this approach: She paid her homeowner association dues. She paid her bills. She kept credit cards and car payments current.
When Stucker went from homeowner to renter, she could show the landlord everything apart from the mortgage was paid on time.
From then on, she kept her nose to the grindstone and kept paying her bills.
"Eventually, enough time passed, and I didn't have any 60- or 90- or 180-days late on my credit," she said. "Right before the two-year mark, I checked my credit for something else. ... It had gone up more than 100 points."
By October, after Stucker married, she and her new husband had saved enough to get an FHA loan on a four-bedroom, 2,500-square-foot house in south Huntington Beach. They paid $625,000 with 3 ½ percent down.
Her credit score is back up to 720.
Her new home needs work. She and her husband repainted the home inside and out, removed 11 trees and fixed a leaky pool. They did much of the work themselves.
Because of the experience, Stucker thinks she's a better real estate agent.
Clients going through their own short sales worry they'll never be able to buy a home again. She knows what they're going through, emotionally and financially, and shares her experience.
"In retrospect, it was a mistake to buy a house with no money down at the height of the market. But who knew it was the height of the market?" Stucker said. "(But) no matter how far you've fallen, there's always up. There's always the possibility that you can own again."
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