FHA Back To Work Mortgage Loans
On August 15 2013 HUD launched the FHA Back to Work Extenuating Circumstances due to an economic event where it waives the traditional waiting period of 2 years after a bankruptcy and the traditional 3 year waiting period after a foreclosure, deed in lieu of foreclosure, short sale to only a one year waiting period to qualify for a FHA loan on a home purchase. However, there are strict mortgage lending guidelines for all FHA Back to Work Mortgage Loans. To qualify for FHA Back to Work Mortgage Loans, the mortgage loan borrower needs to have been unemployed or underemployed for a least six months prior to initiating the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale and the employment termination and/or layoff was the cause of this economic event. Since the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program has been launch, many of those home buyers who thought they qualified are getting denied left and right.
Hardship Due To Loss Of Job
I get dozens of calls everyday from mortgage loan borrowers and home buyers from Illinois, Florida, Wisconsin, California, and Indiana who cannot understand why they got denied for FHA Back to Work mortgage loans by other mortgage lenders. Most of them tell me that they were qualified initially and were issued a pre-approval letter and entered into a real estate purchase contract to find out that their back to work extenuating circumstances due to an economic event mortgage loan ended up with a mortgage loan denial by the Back to Work mortgage underwriter. This is very common. There is no reason why FHA Back to Work mortgage loans should get a denial. FHA Back to Work Extenuating Circumstances due to an economic event mortgage loans are not for everyone who just lost a job. There are several mortgage underwriting guidelines and every FHA Back to Work mortgage loan borrowers need to meet and qualify every line item of the mortgage lending criteria. Here are some of the reasons why mortgage loan borrowers applying for FHA Back to Work Mortgage Loans get denied.
Out Of Work: Terminated And/Or Laid Off
Just being out of work for six or more months prior to your bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale does not automatically qualify you for FHA Back to Work Mortgage Loans. FHA Back to Work mortgage applicants need to have been involuntarily terminated and/or laid off. If you voluntarily quit your job, this will automatically disqualify you for FHA Back to Work Mortgage Loans. Some mortgage applicants quit their jobs and started looking for new jobs because the company they worked for planned on eliminating positions or there were rumors that the company might shut down. If you took the initiative and quit your position prior to being terminated, you will not qualify for FHA Back to Work Mortgage loans. This situation one of the biggest reasons why Back to Work Mortgage lenders get their FHA Back to Work Mortgage Loans denied. Supporting documents is required such as a termination letter.
20% Reduction Of Household Income
During the six months the mortgage loan borrower has been out of work, the mortgage loan borrower’s household income needs to have been reduced by 20% and this reduction was the base of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale. Any reduction less than 20% will not work. Unemployment income is exempt and will not count towards the 20% household income calculation.
Credit history is another major reason why FHA Back to Work mortgage loan borrowers get denied for FHA Back to Work mortgage loans. The Back to Work mortgage loan borrower needs to have had good credit prior to his or her termination. If the mortgage loan borrower had bad credit or late payment history, they will not qualify for FHA Back to Work Mortgage Loans. One or two late payments prior to being out of work can be a cause for mortgage denial for FHA Back to Work mortgage loans. The Back to Work mortgage loan borrower can have a period of bad credit and late payments after they have been out of work. However, mortgage underwriters want to see that the mortgage loan borrower has re-established their credit after they have gotten a new job and there are no late payments allowed after the mortgage loan borrower has re-established themselves.
Verification Of Rent
Most FHA Back to Work mortgage lenders want to see rental verification. Rental verification can only be used by providing 12 months cancelled checks to the landlord. Cash rental payments are not allowed and it cannot be used for rental verification. If you are renting from a property management company, a letter from the property management company is sufficient. If you are living with family and have no rental verification, this can be a cause for a mortgage denial but depending on the circumstances, it may be allowed depending on the mortgage lender.
What Can I Do If Denied Of FHA Back To Work Extenuating Circumstances Due To An Economic Event Mortgage Loan?
All FHA Back to Work Mortgage Loans are manually underwritten mortgage loan applications and just because one manual underwriter may deem it not eligible does not mean another mortgage underwriter will view it the same way. Chances are if you meet the above mortgage lending criteria and are a mortgage loan borrower from Illinois, Florida, Wisconsin, California, or Indiana, and got denied for a FHA Back to Work mortgage loan, then contact me at 262-716-8151 or at www.gustancho.com . Lets go over your case scenario and see if we can make it work. If we can cover all grounds listed above and you can provide documentation, I can do a presentation to a FHA Back to Work mortgage underwriter and see if we can get a verbal thumbs up. I also have FHA Back to Work Extenuating Circumstances due to an economic event wholesale mortgage lenders that will do TBD subject property underwriting where we can process and underwrite your mortgage loan application without you actually entering into a real estate purchase contract.