This BLOG On Have You Gotten Your Back To Work Mortgage Denied Was UPDATED On February 21st, 2018
HUD’ FHA Back to work extenuating circumstances due to economic event mortgage loans shortened the waiting period to one year for those who had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. This loan program turned out to be a total flop. Gustan Cho Associates now has alternative financing called NON-QM Loans where there is no waiting period after foreclosure, deed in lieu of foreclosure, short sale to qualify for home loans. 10% to 20% down payment is required on all non-QM loan programs. There is no private mortgage insurance required on non-QM loans and no maximum loan limits.
FHA Loan After Bankruptcy And Foreclosure
Typically, there is a two year waiting period from the date of a bankruptcy discharge date to qualify for FHA Loans:
- There is a three year waiting period from the recorded date of a foreclosure or deed in lieu of foreclosure, and a three year waiting period from the date of the HUD’s settlement statement for the short sale to qualify for FHA Loans
- However, HUD launched the FHA Back to work extenuating circumstances due to an economic event on August 15, 2013
- The Back To Work program shortened the waiting period to one year for those with prior bankruptcies, foreclosures, deed in lieu of foreclosures, and short sales to qualify for FHA Home Loans
- The FHA Back to Work Mortgage Program turned out to be a flop and got discontinued
In this article, we will discuss and cover Have You Gotten Your Back To Work Mortgage Denied.
Not Too Fast! Many Are Getting Denied For FHA Back To Work Mortgage Loans
The back to work mortgage program turned out to be a total disaster. Only a fraction of those who applied got a conditional mortgage loan approval. Only a tiny fraction of those with conditional mortgage approvals ended up closing on their loans. Never in history has a loan program turn out to be such a disaster. Many lives got ruined due to HUD’s FHA Back To Work Mortgage Program:
- The FHA Back to Work loan program was a newer type of mortgage program and they are all manually underwritten
- I have gotten FHA Back to Work loan approvals for FHA Back to Work borrowers denied by other mortgage lenders
Since FHA Back to Work loans were manually underwritten, the decision on whether or not the FHA Back to Work loan application gets approved or denied totally relies on how the file underwriter interprets the extenuating circumstances on the letter of explanations.
Underwriter Discretion
There are cases where the mortgage broker will just read the letter of explanation and determines that his or her FHA Back to Work mortgage loan applicant qualifies for the Back to Work extenuating circumstances mortgage loan program:
- The mortgage application gets submitted to underwriting and the underwriter determines that the letter of explanation of the extenuating circumstances does not match the W-2s, tax returns, and credit report
- The FHA Back to Work loan application gets denied, the mortgage loan applicant loses the earnest money and the home purchase
- There is a lot at stake with an FHA Back to Work Extenuating Circumstances due to an economic event mortgage file
I am extremely careful with qualifying an FHA Back to Work mortgage loan application.
Back To Work Mortgage Lending Guidelines
To qualify for FHA Back to Work mortgage loans, the borrower needs to have had a significant economic event of unemployment or underemployment. Borrowers needed a 20% reduction of household income for at least six months prior to the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.
- The borrower needs to have had good credit prior to the impact of the economic event
- The borrower has since recovered after the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale and have re-established credit and no late payments since the economic event
- The borrower needs to have completed a HUD-approved housing counseling course
- The mortgage application cannot be dated 30 days after the completion certificate of the housing counseling course
Home Buyers who still need to meet waiting period after housing event and need to qualify for a mortgage with a direct lender with no mortgage overlays can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are correspondent lenders on non-QM loans and bank statement mortgage loan programs for self-employed mortgage borrowers. All of our pre-approvals are full credit loan approvals fully underwritten and signed off by our mortgage underwriters.
