NON-QM Loans Versus Back To Work Mortgage Program

This BLOG On NON-QM Loans Versus Back to Work Mortgage Loan Program  Was UPDATED On January 10th, 2019

All government and conventional loan programs have waiting period requirements after the following:

  • Chapter 7 Bankruptcy
  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale

In this article, we will cover and discuss NON-QM Loans Versus Back To Work Mortgage Loan Program.

Home Loan After Bankruptcy And Housing Event

However, many hard-working Americans who have filed bankruptcy and/or had a housing event recover much soon than the standard mandatory waiting period after bankruptcy and foreclosure.

  • HUD, the parent of FHA, launched a pilot FHA Loan Program called BACK TO WORK MORTGAGE where it reduced the traditional waiting period to one year
  • This program turned out to be a flop and HUD eventually canceled the ill-fated FHA Back To Work Mortgage Period

This BLOG is a rewrite from one of the articles that we wrote about the FHA Back To Work when it first was launched in 2013.

FHA Back To Work Was Launched In 2013

Christmas came early this year for homebuyers who have had a previous bankruptcy, foreclosure, short sale, and deed in lieu of foreclosure back in August 2013.

  • Countless of home buyers were waiting for this FHA Back To Work mortgage program which shortened the waiting period after bankruptcy and housing event to a one year waiting period

NON-QM Loans Versus Back to Work Mortgage Loan Program: Back To Work Program Was Complete Disaster

Unfortunately, the Back To Work Mortgage turned out to be a major five-star DISASTER.

  • Millions of Americans have lost their jobs and homes due to the Great Recession of 2008
  • Many were forced into bankruptcy
  • Many lost their homes through foreclosure
  • The entire mortgage industry underwent through a major overhaul
  • Many mortgage loan products like no doc loans, stated income loans, and teaser rate loans completely evaporated from the industry
  • Thousands of sub prime mortgage lenders literally closed their homes and millions of loan originators were forced out of business due to strict new licensing guidelines as well as the loss of subprime business
  • Those mortgage loan originators who weathered the storm had to adapt to a completely new system
  • They had to learn the new mortgage guidelines

Loan officers needed to get new licensing done such as taking national and state examinations and go through criminal and financial background checks.

Current Waiting Period After Bankruptcy And Foreclosure To Qualify For Home Loan

The current waiting period for home buyers differs depending on the mortgage loan program:

  • For both VA and FHA Loans, the waiting period is 2 years from the discharge date of a Chapter 7 Bankruptcy 
  • Fannie Mae and Freddie Mac require a four-year waiting period after Chapter 7 Bankruptcy discharged date to qualify for conventional loans
  • To qualify for FHA Loans, the current waiting period requirements for homebuyers who had a prior foreclosure, short sale, or deed in foreclosure is three years from the date the foreclosure or deed in lieu was recorded on the county records
  • With VA Loans, it is two years
  • Three years is a long time
  • FHA announced the Back to Work mortgage loan program on August 2013
  • This program shortened the waiting period to one year from the Chapter 7 bankruptcy discharge date and one year from the recorded date after a foreclosure or deed in lieu of foreclosure or short sale
  • Everyone thought this program would open up doors to many homebuyers who have recovered from bankruptcy and/or foreclosure and enable them to purchase a home after a one-year waiting period
  • Everyone that qualified applied to get turned down
  • There are certain requirements that apply for the Back to Work Mortgage Loan Program

But most mortgage lenders were scared to touch it.

Minimum Qualification For NON-QM Loans Versus Back to Work Mortgage Loan Program

There were strict qualification requirements on Back To Work FHA Loans. Not everyone will qualify for the new FHA Back to Work Mortgage Loan Program.

  • The first and foremost important criteria are that FHA requires a good explanation on the extenuating circumstances on the reason the borrower had to file bankruptcy and/or have a foreclosure, deed in lieu, or short sale
  • The reason they are looking for is that the borrower was not employed or had income reduction of at least 20% and that was the cause of filing bankruptcy or having a foreclosure
  • After filing bankruptcy and/or having a foreclosure, FHA wants to see that the mortgage loan borrower has re-established their credit and have not had a late payment in the prior 12 months
  • The mortgage loan borrower needs rental verification and the only way rental verification can be proven is by providing canceled checks which are payable to the landlord for the previous 12 months
  • If the borrower is renting their unit from a property management company, a letter from the property management company will be sufficient

Again, even if borrowers qualified for this mortgage loan program, most lenders did not want to touch it.

NON-QM Loans Versus Back to Work Mortgage Loan Program Underwriting Requirement

What are Mortgage Loan Program Underwriting Requirement

NON-QM Loans Versus Back to Work Mortgage Loan Program: All of Back to Work Mortgage Loan Program loans needed to be manually underwritten.

  • Only lenders that do manual underwrites will be able to do Back to Work Mortgage Loan Program loans
  • Your best bet is to contact a mortgage broker who has access to wholesale lenders who do manual underwrites

But only a fraction of these mortgage applications got conditional loan approvals and even a fraction of loan approvals closed.

Qualify For Home Loan With NON-QM Loans With No Waiting Period After Housing Event

NON-QM Loans Versus Back to Work Mortgage Loan Program is a great option for homebuyers who cannot meet the waiting period on FHA Loans. Housing prices are going up double digits in many parts of the country and  NON-QM Loans Versus Back to Work Mortgage Loan Program is a great short term financing option.

Gustan Cho Associates has an alternative financing program for homebuyers who do not meet the waiting period requirement after a previous housing event:

  • Foreclosure
  • Short Sale
  • Deed In Lieu Of Foreclosure

NON-QM Mortgage Guidelines

NON-QM Loans do not require any waiting period after housing event.

  • However, 10% to 20% down payment is required
  • Mortgage Interest Rates are higher than standard FHA Loans
  • However, most homebuyers can close their home loans with NON-QM Loans and when they meet the waiting period requirements can refinance into a government and/or conventional loan

Home Buyers who do not meet the waiting period requirements on government and/or conventional loans can qualify for NON-QM Loans. Contact  Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.  We are available 7 days a week, evenings, weekends, and holidays.

FHA Back To Work Extenuating Circumstances Mortgage Loan Program: DISCONTINUED

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 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 borrower has experienced an occurrence beyond their control, which 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:

  • The “Economic Event” lasted at least 6 months; and
  •  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;
  • The borrower must have re-established a “Satisfactory Credit” history for at least 12 months without any late payments in the past 12 months;

The borrower must have fully recovered from the “Economic Event”.

Other Requirements For FHA Back to Work Mortgage Loan Program

Borrowers who are a qualified candidate for the new FHA Back to Work Extenuating Circumstances mortgage loan program need to make sure that you get your signed housing counseling certificate as soon as possible.  The mortgage application cannot be started until 30 days after you receive your HUD-approved housing counseling certificate.

UPDATE On Back To Work Versus NON-QM Loans

As mentioned earlier, the Back To Work Extenuating Circumstances due to an economic event mortgage loan program no longer exists.

  • NON-QM Loans offered by Gustan Cho Associates has no waiting period after a housing event and a one year waiting period after bankruptcy
  • It does require 20% down payment
  • Bank Statement Loans for self-employment borrowers do not require income tax returns
  • We go by deposits of either personal or business bank statements
  • 24 months of bank statement deposits are averaged to get a monthly income
  • Borrowers need to be self-employed for 2 years and cannot have any bank overdrafts in the past 24 months to qualify

For more information on our NON-QM Loans and Bank Statement Mortgage Loan Program for self-employed borrowers, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at gcho@gustancho.com.

FHA Back to Work Extenuating Circumstances Mortgage Versus NON-QM Loans

On August 15th, 2013, HUD has introduced the FHA Back to Work Extenuating Circumstances due to an economic event mortgage program:

  • The FHA Back to Work Extenuating Circumstances due to an economic event shortened the waiting period to one year for those home buyers who had a prior bankruptcy and/or housing event
  • Housing events are foreclosure, deed in lieu of foreclosure, or short sale
  • One of the major requirements for a home buyer to qualify under the FHA Back to Work Extenuating Circumstances due to an economic event was borrowers had to prove that they were unemployed or underemployed
  • Need to have been unemployed for at least six months prior to the initiation of the bankruptcy and/or foreclosure proceedings
  • Proper documentation will be required as well as supporting facts
  • A one hour HUD approved counseling course need to completed and the certificate needs to be signed by the housing counselor
  • The maximum debt to income ratios are 31% front end and 43% back end
  • The FHA Back to Work Extenuating Circumstances due to an economic event mortgage programs were all manual underwrites
  • The underwriter has tons of discretion in mortgage approvals
  • A detailed letter of explanation is what will make or break this deal

Unfortunately, this loan program was a total flop and HUD ended up discontinuing it.

NON-QM Loans With No Waiting Period After Housing Event

As mentioned earlier on this BLOG, the Back to Work Extenuating Circumstances Mortgage is no longer available. Gustan Cho Associates Mortgage Group now offers NON-QM Loans with no waiting period after a housing event.

Here is how NON-QM Loans Work:

  • No Waiting Period After Foreclosure
  • No Waiting Period After Deed In Lieu Of Foreclosure
  • No Waiting Period After Short Sale
  • One Year Waiting Period After Chapter 7 Bankruptcy
  • 10% to 20% down payment on home purchase
  • We offer 12 month Bank Statement Mortgage Loan Program for Self Employed Borrowers

Gustan Cho NMLS 873293 is the National Managing Director of NEXA Mortgage, LLC dba as Gustan Cho Associates NMLS 1657322. Gustan Cho and his team of loan officers are licensed in multiple states. Over 75% of the borrowers of Gustan Cho Associates (Gustan Cho Associates) are folks who could not qualify at other lenders due their lender overlays on government and conventional loans. Many mortgage borrowers and real estate professionals do not realize a mortgage company like Gustan Cho Associates exists. We have a national reputation of being a one-stop mortgage company due to not just being a mortgage company with no lender overlays but also offering dozens of non-QM and alternative financing loan programs. Any non-QM mortgage loan program available in the market will be offered by the team at Gustan Cho Associates. Our team of support and licensed personnel is available 7 days a week, evenings, weekends, and holidays.

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