Pennies

Millions of Spenders Are Ready to Come Back From the Mortgage Crisis

I would say possibly able, but not ready or willing…

Millions of Americans lost their homes to foreclosures or short sales during the housing crisis. Fortunately for the economy, time heals most wounds — and credit reports.

The number of people joining the rolls of those knocked from homeownership peaked seven years ago, so those blotches to their histories are starting to roll off the books right about now. The resulting improvement in credit scores means more Americans will find themselves with the ability and means to once again apply for loans, and not just for home purchases.

“Improving credit scores might entice households to start borrowing more in general,” said Ralph McLaughlin, chief economist at real estate search engine Trulia. And what better time than now, when interest rates are so low.

That, combined with sustained gains in employment and bigger increases in pay, could give consumer spending, which accounts for almost 70 percent of the U.S. economy, an added lift over the next couple of years. The impact, though, is hard to quantify because it’s difficult to estimate how many people will once again be emboldened to borrow after experiencing such a shock, said Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC in New York.

The number of consumers with a new foreclosure added to their credit reports peaked at about 566,000 in the second quarter of 2009, according to data from the Federal Reserve Bank of New York. In the four years through 2010, that group totaled 6.8 million.

Rest here…

Once bitten, twice shy…

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4closureFraud.org