(Bloomberg) -- Jason Schmitt lost his $90,000-a-year job on an oil rig in 2009. The bank repossessed his Tulsa home and a rental property, and the former U.S. Army combat engineer filed for bankruptcy. Last month, after moving with his family to his Missouri hometown, he bought the $75,000 three-bedroom home he had been renting with the help of a Veterans Administration mortgage that lets borrowers buy property only two years after a foreclosure. “I’m not embarrassed by saying we had a bankruptcy—it seems that so many people have fallen victim to losing their job,” says Schmitt, now a nursing recruiter for the U.S. Department of Veterans Affairs. “We’ve come back from this, and we are not going to give up on homeownership.”
(Bloomberg) -- Jason Schmitt lost his $90,000-a-year job on an oil rig in 2009. The bank repossessed his Tulsa home and a rental property, and the former U.S. Army combat engineer filed for bankruptcy. Last month, after moving with his family to his Missouri hometown, he bought the $75,000 three-bedroom home he had been renting with the help of a Veterans Administration mortgage that lets borrowers buy property only two years after a foreclosure. “I’m not embarrassed by saying we had a bankruptcy—it seems that so many people have fallen victim to losing their job,” says Schmitt, now a nursing recruiter for the U.S. Department of Veterans Affairs. “We’ve come back from this, and we are not going to give up on homeownership.”
Even as banks impose stricter mortgage standards, the improving job market is lifting incomes and helping families such as the Schmitts repair credit scores, expanding the pool of eligible buyers and providing additional firepower to the housing recovery. About 7 million mortgage holders have had to leave their homes since 2007 because of foreclosure or a short sale, in which a property is sold for less than is owed, according to RealtyTrac. More than 1 million of them are now eligible for mortgages backed by the Federal Housing Administration, which considers applicants three years after a foreclosure or short sale, says Mark Zandi, chief economist for Moody’s Analytics (MCO). Eligible households will expand to nearly 2 million by the end of 2014. “This could be a significant source of housing demand going forward,” Zandi says. “Lots of people lost jobs through no fault of their own. They will be good credit risks in a reasonably good economy. It was not their willingness that was the problem, but their broad ability to pay.”
As the economy has recovered, Americans have lifted their credit scores by paying off credit cards, car loans, and other debts, says Joanne Gaskin, product management director for scores at FICO (FICO), which assesses creditworthiness. Says Ezra Becker, a vice president at credit bureau TransUnion: “One of the great tenets of credit is that time heals.”
