FHA Back To Work Extenuating Circumstances Due To Economic Event
HUD just launched the Back to Work Extenuating Circumstances due to economic event mortgage loan program which shortens the waiting period for those who have had filed bankruptcy, had a foreclosure, a deed in lieu of foreclosure, or short sale to one year. There are strict rules and regulations and not everyone can qualify. The Back to Work Extenuating Circumstances due to economic event mortgage loans are all manually underwritten so not every mortgage lender will be able to process and underwrite these mortgage loans. Banks will not be able to do them and only a few select mortgage bankers are participating in this program.
Back To Work Extenuating Circumstances Qualifications
Back to Work Extenuating Circumstances due to an “Economic Event”
An “Economic Event” is when a borrowers has experienced an occurrence beyond their control, that resulted in a loss of income, loss of employment, or a combination of both. The manual downgrade of an “Accept/Approve” recommendation, may be eligible for FHA purchase transaction financing provided all the following requirements are met:
1. The “Economic Event” lasted at least 6 months; and
2. The “Economic Event” resulted in a 20% or more reduction in the borrower’s household income;
Documented evidence that the delinquencies were due to the “Economic Event” must be provided;
Borrower must have reestablished a “Satisfactory Credit” history for at least 12 months without any late payments in the past 12 months;
Borrower must have fully recovered from the “Economic Event”;
Housing Counseling Required
1. The borrower must attended an approved housing counseling program at least 30 days, but no more than 180 days prior to initial application. Counseling must be performed by a HUD approved housing counseling agency, state housing finance agency, approved intermediaries or their sub-grantees.
2. Counseling may be conducted in person, via telephone, via internet , or other methods approved by HUD.
3. Upon completion of the required counseling, the borrower will be given a Counseling Certificate of Completion that must include the counselor’s handwritten signature. In instances that the counseling certificate is received electronically or via other means and does not include a counselors handwritten signature, the borrower must obtain the counselors signature. This may be accomplished by faxing or emailing the certificate to the counselor to obtain their handwritten signature.
Other Requirements For FHA Back to Work Extenuating Circumstances Mortgage Loan Program
If you are a qualified candidate for the new FHA Back to Work Extenuating Circumstances mortgage loan program, you need to make sure that you get your signed housing counseling certificate as soon as possible. Your mortgage application cannot be started until 30 days after you receive your HUD approved housing counseling certificate.