06282017Headline:

FHA Back to Work Extenuating Circumstances Explained

Victims of the recent recession may be eligible to buy a home in as little as 12 months after a bankruptcy, foreclosure, short sale or deed in lieu of foreclosure.

FHA has taken a big step toward acknowledging that the economy forced many responsible California homeowners into default or bankruptcy.

It’s Not Your Fault An extenuating circumstance is an event that happens completely outside of your control.

Prior to August 2013, extenuating circumstances were limited to the death or permanent disability of a primary wage earner resulting in a loss of income, which eventually leads to a hardship such as bankruptcy, or loss of home.

The Back to Work extenuating circumstance expands this definition to include loss of income due to economic hardship due to a loss of income resulting from lay off, termination, or employer going out of business.

Qualifying for Back to Work Exception You may be eligible to qualify for the back to work exception if:

Satisfactory Credit In order to qualify for the back to work exception, you have to show that the financial hardship is in the past and not likely to occur again.

Satisfactory Credit encompasses specific requirements that must be documented prior to this exception being granted:

Satisfactory Credit – Required Documentation Your lender must verify and document a minimum 20% reduction in your household income for a period of at least six months that resulted from a loss of employment, loss of income, or a combination of both.

To verify and document a Loss of Employment:

To verify and document a Loss of Income:

For a Loss of Income based on seasonal employment, your lender will need to verify and document a two year history of seasonal employment in the same field just prior to the Loss of Income, in addition to meeting the documentation requirement above.

For a Loss of Income from losing a part-time job, the lender will need to verify and document a two year history of continuous part-time employment just prior to the Loss of Income in addition to meeting the documentation requirement above.

Housing Counseling Requirement A requirement of establishing Satisfactory Credit following an Economic Event, boomerang buyers looking to use the Back to Work Extenuating Circumstances exception must complete Housing Counseling from a HUD approved housing counseling agency.

Extenuating Circumstances Exception participants must:

Housing counseling may be conducted in person, via telephone, via internet, or other methods approved by HUD.  For a list of HUD approved counseling agencies in California, you can view online here – HUD Counseling Providers Online, or call 1(800) 569-4287.

Where to Start? Broadview Mortgage is a California direct lender that has specializes in helping boomerang buyers navigate through the process of buying after a bankruptcy, foreclosure, short sale or deed in lieu of foreclosure.

Ready to Buy Again? California homebuyers can start the simple process of getting pre-approved here:

What Next?

Related Articles