Back To Work Extenuating Circumstances FHA Mortgage Loan

This BLOG On Back To Work Extenuating Circumstances FHA Mortgage Loan Was UPDATED On September 7th, 2017

If you had to file bankruptcy or had a foreclosure, there are mandatory waiting periods if you want to get a FHA insured mortgage loan.

  • The waiting period is 2 years from the date of your bankruptcy discharge date and the waiting period is three years from the date of a short sale as reflected on the HUD and three years after the recorded date of a foreclosure or deed in lieu of the foreclosure. 
  • Just because a person had waited out the mandatory waiting period does not automatically qualify the borrower for a mortgage loan. 
  • Mortgage lenders need to see that the borrower has had no late payments after a bankruptcy and/or foreclosure and has re-established credit. 
  • Most mortgage lenders also require rental verification. 
  • For those who has no established traditional credit, non traditional credit can be substituted such as phone bill payments, utility payments, and rental verification.

Back To Work Extenuating Circumstances FHA Mortgage Loan Program – 1 Year Waiting Period After A Foreclosure, Deed In Lieu Of Foreclosure, Short Sale, And Bankruptcy

On August 15, 2013, FHA announced that the Back to Work mortgage loan program is effective.

  • The Back to Work extenuating circumstances FHA mortgage loan program is a program that was implemented to offer certain select mortgage loan borrowers who has suffered a bankruptcy, foreclosure, deed in lieu of foreclosure, short sale due to extenuating circumstances such as a job loss or pay check reduction for at least six months prior to them going into foreclosure of having to file for bankruptcy. 
  • Not everyone qualifies and these Back to Work mortgage loans are all manually underwritten and only mortgage lenders who manually underwrite can do these loans.

Back To Work Extenuating Circumstances FHA mortgage Loan Program Requirements

In order to qualify for the Back to Work mortgage program, the applicant needs to have had at least a 20% reduction of income or household income or have been unemployed for a period of six months or more preceding the foreclosure or bankruptcy.

  • This fact needs to be fully documentation and a letter of explanation is not sufficient. 
  • Divorce is not a valid reason for loss of income.
  • The Back to Work applicant needs to have re-established credit and needs to prove that he or she is back to work and is able to make his or her new mortgage payment.
  • The applicant needs to show that he or she has been timely with all of his or her monthly payments for the past 12 months.
  • The applicant needs to prove that he or she has been timely with his or her monthly rental payments for the past 12 months so rental verification is a requirement. 
  • Rental verification is proven by providing the mortgage lender proof of cancelled checks for the prior 12 months unless the renter is renting from a licensed property management company in which a letter from the property manager will be sufficient.

The applicant needs to take a one hour HUD certified course.  The mortgage application until 30 days after the borrower provides the HUD course certificate.

2017 UPDATE On Mortgage Loans After Bankruptcy And Foreclosure

The FHA Back To Work Extenuating Circumstances due to an economic event mortgage loan program has been discontinued.

  • However, The Gustan Cho Team at USA Mortgage has launched NON-QM Loans where there is no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale.
  • However, 10% to 20% down payment is required.
  • The Gustan Cho Team at USA Mortgage also launched Bank Statement Mortgage Loan Program for self employed borrowers where no tax returns are required.
  • Income is calculated by bank deposits and not withdrawals.

For more information, please contact us at 1-800-900-8569 or text us at 262-716-8151 for faster response. Borrowers can also email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.

Visit HUD at  http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee

Related> FHA Back To Work Mortgage

Related> FHA Back To Work Extenuating Circumstances Due To An Economic Event

Related> Do You Qualify For The FHA Back To Work Mortgage Program?

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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