The Federal Housing Administration (FHA) recently announced a significant mortgage rule change that will allow some borrowers to get a new FHA loan as early as just one year after short-sale, deed-in-lieu, full foreclosure, or bankruptcy as part of their new “Back to Work – Extenuating Circumstances” program.
Back to Work Eligibility guidelines are pretty strict.
Potential borrowers must be able to prove that a major economic event, such as a job loss, or severe reduction in household income (20 percent for at least six months) was the main catalyst in losing their home.
Potential new homeowners will also need to document and prove their income has since fully recovered, and that their credit score are now satisfactory. Finally, potential borrowers will need to complete a one-hour one-on-one housing counseling session.
Borrowers will need to meet all other standard FHA eligibility criteria for an FHA mortgage loan.
To be deemed with “satisfactory credit,” borrowers will need to meet the following guidelines for a minimum of 12 months:
- No collection accounts or court records reporting (other than medical and/or identity theft).
- No history of delinquency on rental housing payment.
- No more than one 30-day late payment due to other creditors.
Prior to the major economic event, the borrower’s credit must have been satisfactory and in good standing.
With that all said… my company, Mortgages Unlimited, will be happy to review you for approval under this new program. The first steps are:
- Have borrower document the 20% drop in income.
- Have borrower take counseling
- Then take full FHA mortgage application
A list of acceptable housing counselors can be obtained by calling 1 (800) 569-4287 or online at www.HUD.gov