Buying a Home After Foreclosure

Homeowners who lost a home to foreclosure can still go out and purchase another home. Real estate agent Chrisia Simkovich of Northwood Realty in Latrobe, Pennsylvania is learning that first hand.

"I have 7 buyers right now and 3 of them lost their homes in foreclosure during the past 2 or 3 years," she told me. "2 of the buyers were referred to me."

Chrisia said it's possible for buyers who lose their homes to purchase again in a couple of years. She's representing buyers who lost their homes to circumstances that spiraled out of control for them. One couple had major health problems and the husband lost his job.

"Their home went into foreclosure," she said, "but we're out house hunting now and we've found 4 homes that are suitable for them. I believe we're seeing the beginning of the foreclosure wave in Western Pennsylvania, so I anticipate more buyers in this category."

Record keeping is important for homeowners who are in the process of losing their homes to "legitimate reasons" - such as health problems and loss of jobs.

"I urge them to keep good records of their situation that led to foreclosure," she said. "There are companies who can help them get 'foreclosure forgiveness.' I'm learning about this myself.

"One of the couples I'm representing has an attorney and they've approached a firm to assist them in obtaining the 'foreclosure forgiveness.' If they succeed then they're looking at an interest rate of 7.5%. Otherwise, they can expect a rate of about 12%. This couple also was able to purchase a mobile home after they lost their primary home. They bought it for cash and now they've sold it for cash. So they have $25,000 cash on hand. They documented their situation to show they didn't spend recklessly to get themselves in trouble."

Learn how the banks and appraisers work.

"I know of a mother who got divorced and refinanced her home. Then she ran into problems and she wanted to get her house listed on the market before it went into foreclosure. Here's what happened:

She bought her home for over $250,000 and she went to refinance a year later. She had an appraisal come in for over $400,000. But it shouldn't have been higher than $325,000. However, she refinanced her home for the higher amount thanks to an unscrupulous appraiser and the home wound up selling in foreclosure 2 1/2 years later for $160,000. I've told her go to the state attorney general."

Banks don't take every offer from sellers facing foreclosure and, sometimes, they don't take any offers.

"This case took place in Mt. Pleasant, Pennsylvania," said Chrisia. "The mortgage lender, a national lender, wanted $240,000 for the home. I took the lender an offer of $250,000 and it was going in to foreclosure in 24 hours. They turned down the offer I brought them and I'm not sure the reasons why."

If you're facing foreclosure, then know how the banks work and stay on top of them. The homeowner must take responsibility to know when the home actually goes into foreclosure becase the banks won't say.

In Pennsylvania, foreclosure is a full 90 days past the due date and then it can take up to a year to start foreclosure proceedings. Properties can be empty for 2 - 3 years as it works through the system.