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Change in policy may help some who lost a home to foreclosure

Several years ago, the housing market crashed and sent prices and property values tumbling. As a result of the severe downturn, many families in Washington lost their homes to foreclosure. Fortunately, some of those families may now have a chance to buy back their homes due to a new policy.

Under the previous policy, those who lost a home that was financed through Fannie Mae or Freddie Mac would have been required to pay the remaining balance of the mortgage, in full, if they desired to repurchase the house. However, the current regulator in charge of both agencies has announced that homes could now be repurchased for the current market value. This is a decided change from the old policy that negated a reduction in the principal amount owed.

Currently, this shift in the policy may only unlock the door to home ownership for an estimated 121,000 homeowners. However, some see the announcement as a possible change in the regulator's former reluctance to agree to reduce the total mortgage owed to reflect current market values. The director of the two agencies has stated that it is hoped that the change will have the desired effect of bringing stability to neighborhoods that have been plagued by vacant properties.

Washington families who lost their homes to foreclosure and wish to buy back their homes after the three-year waiting period could benefit from carefully examining the current state of their finances. If their finances are still in disarray, even without having to make a mortgage payment, they might consider filing for bankruptcy. Bankruptcy can be a way to escape overwhelming debt and take a step toward a fresh financial start. 

Source: dispatch.com, "Policy helps ex-owners to buy back foreclosures", Jason Lange, Nov. 25, 2014

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