FHA Back to Work Extenuating Circumstances Due To Economic Event

HUD’s brand new FHA Back to Work Extenuating Circumstances due to Economic Event was effective August 15, 2013 and makes homeownership possible to home buyers who have had a prior bankruptcy and/or foreclosure by shortening the mandatory waiting period to a one year waiting period.  Under normal circumstances, a home buyer needs to wait a two year mandatory waiting period after the discharge date of a bankruptcy and three years from the recorded date of a foreclosure or deed in lieu of foreclosure or date of a short sale.  However, with the FHA Back to Work Extenuating Circumstances due to economic event, the home buyer and qualify for a mortgage loan only after one year after the discharge date of a bankruptcy or after the recorded date of the foreclosure or deed in lieu of foreclosure.  It also shortens the waiting period from three years to one year from the date of the short sale per their HUD’s settlement statement.

Qualifications For FHA Back To Work Extenuating Circumstances Due To Economic Event

In order to qualify for HUD’s new FHA Back to Work Extenuating Circumstances due to Economic Event the borrower needs to have been unemployed, or underemployed for at least six months prior to filing bankruptcy or the initiation of foreclosure proceedings which has affected the borrower’s household income of at least 20% or more.  The borrower needs to complete a one hour HUD approved housing counseling course and have had no late credit payments for the past 12 months or since the bankruptcy and/or foreclosure.  FHA Back to Work Extenuating Circumstances due to an economic event mortgage lenders like to see re-establish credit and rental verification.  The borrower also needs to prove that he or she has a stable income source and that the income source will continue for the next three years.

Is FHA Back to Work Extenuating Circumstances Due To Economic Event Different That Other FHA Loan Programs?

HUD’s new FHA Back to Work Extenuating Circumstances due to Economic Event is no different that any other FHA loan programs.  You will get the same mortgage rates and terms depending on your credit scores.  However, the way it is underwritten is different.  All FHA Back to Work Extenuating Circumstances due to Economic Event mortgage loans in Illinois and Florida are manually underwritten since these mortgage loan applications will not get a DU Automated Underwriting System approval by Fannie Mae.  The front end debt to income ratios are capped at 31% and the back end debt to income ratios are capped at 43%.  The mortgage loan underwriter has a lot more discretion in underwriting the file and it will be the underwriter’s decision whether to approve or deny the mortgage loan application.  The most important factor on all FHA Back to Work Extenuating Circumstances due to economic event mortgage loan applications will be the detailed letter of explanation the borrower needs to write and sign concerning the extenuating circumstances.

If you feel you qualify for HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event, contact Gustan Cho at 262-716-8151 or www.gustancho.com.

Gustan Cho NMLS ID # 873293

Related> 2015 Update On FHA Back To Work Mortgage

Related> Do You Qualify For FHA Back To Work In California?

Related> FHA Back To Work Extenuating Circumstances Mortgage Loans

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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