Photo credit: U.S. Department of Agriculture cc
7.2 million Homes have been lost to foreclosure and short sales since the beginning of the housing crisis according to data from Black Knight Financial Services. Most of these former homeowners became renters; some desired to get back into homeownership.
Last August the Federal Housing Administration (FHA) launched “Back to Work- Extenuating Circumstances” to help these former homeowners get back into homeownership. With Back to Work you can apply no less than a year after having financial challenges such as bankruptcy, foreclosure or short sale. This program will run through September 2016.
Previously the waiting period for FHA loans after filing bankruptcy was two years and three years after a foreclosure or short sale. The FHA crafted this program to consider that many homeowners were responsible with their credit and mortgage payments, but had things they couldn’t control happen during the worst economic downturn since the Great Depression.
How do you qualify?
If you’ve had a financial hardship in the past, but can provide documentation that you now:
See 3 Ways to Get Your Loan Disapproved
A lender will have to determine if you meet FHA loan requirements before applying for a FHA loan under the Back to Work program. If your household income dropped by 20 percent or more for at least six months or if you can explain some other financial experience that was out of your control, it may be considered as a financial hardship. You must have twelve months of on-time rental housing payments, no delinquencies and no more than 30 days late on more than one non-housing loan payment.
How to get started?
You must take a pre-purchase housing counseling course with a HUD approved housing counseling agency 30 days before starting the application. A certified housing counselor will consider your debt, ability to afford the mortgage, explain mortgage insurance, mortgage features and the loan application process. Your certificate is valid for six months.
Find a HUD Approved Housing Counselor
Resources:
Mortgage Orb. “FHA Rolls the Dice with ‘Back to Work’ Program” 24 June 2014. http://www.mortgageorb.com/issues/SME1311/FEAT_03_FHA-Rolls-The%20Dice-With-Back-To-Work-Program.html
National Association of Realtors. “Boomerang Buyers Get Second Chance” 24 June 2014. http://realtormag.realtor.org/daily-news/2014/06/16/boomerang-buyers-get-second-chance