06242017Headline:

Federal Housing Authority Unveils their newest creation – “Back to Work – Extenuating Circumstances” Mortgage Program!

Owning a new home is now made even easier to qualify for an FHA insured home loan.  With our Rent to Own program, we’ll be able to get you qualified for a mortgage in as little as 12 months regardless of your past history.  With this new FHA “Back to Work – Extenuating Circumstances Mortgage Program” effective as of August 15th has waived its 3 year waiting period after anyone who has underwent foreclosure, short sale, or bankruptcy.  Effective for FHA Case Numbers assigned on, or after, August 15, 2013, borrowers with a recent history of bankruptcy, foreclosure, judgment, short sale, loan modification or deed-in-lieu can apply for an FHA 3.5% down loan.  THAT’S INCREDIBLE NEWS!!

The “Back to Work” Program is available as of August 15th from the Federal Housing Administration, better known as FHA relaxed its guidelines for homebuyers who “experienced periods of financial difficulty due to extenuating circumstances” and would like to purchase a home again.

The “Back to Work – Extenuating Circumstances Program”, has removed the traditional waiting periods that typically followed a derogatory credit event such as a Chapter 7 bankruptcy or if you had a short sale and had late mortgage and/or installment debt in the 12 months preceding the closing of the short sale.

If you’ve experienced any of the following financial difficulties over the last few years, you may be eligible for a new FHA insured mortgage to become a homeowner once again:

FHA has realized that, sometimes, credit events 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.

If you are a Homebuyer who has experienced an Economic Event (Short Sale, Bankruptcy, Deed in Lieu of Foreclosure or Foreclosure) in the past and can document that

(1) certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control,

(2) the homebuyer has demonstrated full Recovery from the event and,

(3) the homebuyer has completed housing counseling.

A Recovery is considered full, if “the borrower’s credit history is clear of late housing or installment debt payments, and major derogatory credit issues on revolving accounts; any open mortgage is current and shows twelve (12) months satisfactory payment history. Mortgages may have been brought current through loan modification, which may be “temporary” or “permanent” so long as all payments have been documented as being received in accordance with the modification agreement.”

If the homebuyer meets the test for the Recovery, they must meet the another new test to see if the Loss of Employment or Loss of Income was severe enough to justify the Economic Event. The test put in place requires the documentation of a Borrower Household Income loss of twenty percent or more for a period of at least six months.

These transactions will require additional documentation for underwriting and loan approval, so homebuyers need to be prepared to provide the extra documentation and should allow a longer time period to obtain loan approval.

(a) the bankruptcy was discharged 12 or more months ago,

(c) that 12 months have lapsed since the date of title transfer to the foreclosing lender in the event of a foreclosure

If you are considering buying a new home here are the definitions that are considered during the loan approval process.

What Next?

Related Articles