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Few homeowners expected to return to the market after foreclosure

Foreclosure has negative effects for homeowners that last long after they must give up their property to the bank, according to the National Association of Realtors. The group says that the vast majority of people who lost their homes to foreclosure during the recent crisis and since then probably will never buy a house again.

As reported by The Wall Street Journal, between 2006 and 2013 more than 9.3 million American homeowners either were foreclosed upon, voluntarily gave their home to the bank or sold their home via distress sale. According to the NAR, about 2.5 million of those homeowners have gone on to purchase a new home, or will have the financial means to do so by 2023.

This leaves nearly 7 million former homeowners who will never be able to obtain a mortgage for the rest of their lives, or will be too disenchanted with the system to attempt to borrow money again.

Part of this is due to rules about government-backed mortgages. A borrower who went through foreclosure is ineligible for a new government-backed mortgage for up to seven years. Thus, many people whose lenders foreclosed on them in the past few years may not be able to obtain a mortgage, though others whose foreclosure took place in the early years of the foreclosure crisis are now emerging from this prohibition.

Unfortunately, others will be scared off by having gone through foreclosure, and will not risk possibly going through it again.

Foreclosure can indeed be frightening, since you could lose your house. But an experienced foreclosure defense attorney may be able to stop that from happening, and will defend your rights every step of the way.

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