The
FHA "Back To Work" Program Is Official
Effective August 15th
2013
Loans
failing to meet FHA mortgage guidelines do not get insured, and the Federal
Housing Administration has been steadily tightening its requirements since last
decade's housing downturn.
On
August 15, 2013, the Federal Housing Administration moved to relax
its guidelines for borrowers who "experienced periods of financial
difficulty due to extenuating circumstances".
AKA
the "Back To Work - Extenuating Circumstances Program", the FHA removed the standard waiting periods that
typically followed a derogatory credit event.*
If
you've experienced any of the following financial difficulties, you may be program-eligible
:
- Short
sales
- Deed-in-lieu
- Foreclosure
- Chapter
7 bankruptcy
- Chapter
13 bankruptcy
- Loan
modification
- Forbearance
agreements
FHA understands that, sometimes, credit issues may be beyond your control, and
that credit histories don't always reflect a person's true ability or
willingness to pay on a mortgage.
Find
out if the FHA's Back to Work - Extenuating Circumstances program applies to
you.
What
are the minimum eligibility requirements of the FHA Back To Work program?
In
order to qualify, you must meet several minimum eligibility standards. The
first is that you must have experienced an "economic event"
(e.g.; pre-foreclosure sale, short sale, deed-in-lieu, foreclosure,
Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification, forbearance
agreement). The second is that you must demonstrate a full recovery from the
event. And, third, you must agree to complete housing counseling prior to
closing. You must also show that your household income declined by 20% or more for a period of at least 6 months, which coincided with the above "economic
event".
How
do I document a 20% loss of household income for the FHA?
In
order to document a 20% loss of household income, you must present federal tax
returns or W-2s, or a written Verification of Employment evidencing prior
income. For loss of income based on seasonal or part-time employment, two years
of seasonal or part-time employment in the same field must be verified and
documented as well. Income after the onset of the
economic event, which should represent a loss of at least 20% for at least six
months, should be verified according to standard FHA guidelines. This may
include W-2s, pay stubs, unemployment income receipts, or other. Your lender
will help you determine the best method of verification.
*Standard Wait Periods
without the “Back To Work” Exception are:
Chapter
7- FHA- 2 Years
- VA- 2 Years
- Conventional- FNMA and FHLMC 4 years
·
FHA- 3 Years
·
VA- 2 Years
· Conventional- FNMA and FHLMC 7 years
For more information email hcraig@homelending4u.com
