According to a recently released study by credit agency TransUnion, 1.5 million Americans who were forced out of the housing market by the housing crash will flood the housing market in the next two years.
According to TransUnion’s vice president and head of its mortgage group Joe Melmman – who spoke to the New York Times – these homebuyers likely have “a higher desire and interest in getting a mortgage because they’ve had one before.”
The study found that 1.2 million “credit weakened” borrowers had sufficiently recovered by the end of 2014 to the point that they met Fannie Mae’s underwriting guidelines – all had at least a 620 FICO score, had no unpaid judgements or pending liens, and all had passed the required loan waiting period.
Further, TransUnion predicts 700,000 more will join that group this year, 300,000 in 2016, and 500,000 in 2017.
Melmann believes many of these people will not even realize their credit has sufficiently recovered to the point of fulfilling underwriter guidelines and that originators and lenders should be focusing on educating potential homebuyers about their options.
According to TransUnion, 7 million Americans were impacted by the housing bubble burst, including people who had a mortgage in the burst that was 60+ days overdue, lost their mortgage between the bubble and the burst, or had a mortgage loan medication during that time.
Of course, the study only looked at credit worthiness and not individual financial profiles, meaning that despite the improved credit rating, many may still lack the funds to jump back into the market.