FHA started a new loan program August of 2013 called FHA Back to Work mortgage program. With this program HUD has waived the 3 year mandatory waiting period if you have had a foreclosure. This program is for borrowers who have had extenuating circumstances such as:
- Short sale
- Bankruptcy – chapter 7 or 13
- Loan modification
- Deed-in-lieu of foreclosure
If a borrower has had any of these situations you may qualify for this loan. FHA will consider borrowers who have experienced an economic hardship that can be documented. This documentation must show that a hardship resulted from loss of employment or signification loss of house hold income. A borrower must show that they have made full recovery from the event and completed housing counseling. Full recovery is different for this loan. All a borrower would have to show is that they have re-established their credit for at least 12 months.
To re-establish credit a borrower must show a 12 month record of on-time housing payments and not have been 30 days late on more than one non-housing payment such as car loan, phone bill, etc. If a borrower has a collection or judgment open then FHA will complete a “Capacity analysis.” A capacity analysis will determine if you have the means to repay those specific creditors.
- A borrower must meet FHA loan requirements
- Have documented the financial event that resulted in financial hardship
- Re-established a credit history (Minimum of 12 months)
- Must complete a Hud-Approved Housing counseling
Housing Counseling Program
- Gain an understanding of loan options and obligations
- Access reliable information and resources
- Create and evaluate a household budget
- Avoid scams and prepare for future financial changes
What Does an Economic Event Mean?
- 20 percent or more reductions in a borrowers household income for at least 6 months
- Economic event must be due to loss of employment, income, or it could be a combination of both
To see if you qualify for the FHA Back to Work Mortgage Program contact me. I will help you to find a approved HUD housing counselor or you can call 1-800-569-4287 or go to their website at www.hud.gov. Also, If you do not have a mortgage broker that can help you, I have participating mortgage brokers for you to talk with.