Home Loan Programs After Bankruptcy And Foreclosure
This BLOG On Home Loan Programs After Bankruptcy And Foreclosure Was UPDATED On August 29th, 2017
There are various Home Loan Programs After Bankruptcy And Foreclosure. However, all Home Loan Programs After Bankruptcy And Foreclosure have waiting period requirements with the exception of NON-QM Loans. FHA has announced that the waiting period for those who have filed bankruptcy has been trimmed from the current two year waiting period to one year with the FHA Back To Work Program a few years ago. However, the FHA Back To Work Program has been discontinued. This BLOG on FHA Back To Work Extenuating Circumstances Due To An Economic Event will remain for archival purposes.
- For those who have had a foreclosure, short sale, deed in lieu of foreclosure, there was a 3 year mandatory waiting period but has now changed to a one year waiting period.
- This one year waiting period will help hundreds of thousands of potential home buyers but they will need to meet certain new FHA guidelines to qualify.
- Not everyone will be able to qualify.
Note: Again, FHA BACK TO WORK EXTENUATING CIRCUMSTANCES DUE TO AN ECONOMIC EVENT MORTGAGE PROGRAM HAS BEEN DISCONTINUED
Home Loan Programs After Bankruptcy And Foreclosure: Back to Work Program
Currently, there is a two year mandatory waiting period after the discharge of a Chapter 7 bankruptcy in order for a home buyer to qualify for a FHA Loan.
- There is a three year mandatory waiting period after the recorded date of a foreclosure, deed in lieu of foreclosure to qualify for FHA Loans.
- FHA will offer a one year waiting period after a deed in lieu of foreclosure, bankruptcy, short sale, and/or loan modification if the mortgage borrower falls within a certain credit criteria.
- It is called the Back to Work Program and to qualify, mortgage loan borrowers need to be able to prove that their household gross income has fallen by at least 20% or more for at least a period of six months or more.
- The reduction of income needed to be as a result due to unemployment and/or another disaster or hardship event which was beyond their control.
- The mortgage loan borrower must show that they have had at least a one hour certified, approved hour of housing counseling which can be done over the phone or online.
- The mortgage loan borrower needs to prove that they have had paid their rental payments timely for the past twelve months, which is called rental verification.
- Cash payment for rent cannot be used as rental verification and a paid receipt cannot be used as rental verification.
- The only way they can show solid proof for rental verification is by providing the lender copies of cancelled checks unless they are renting their home from a licensed property management company.
- Letters from a licensed property management company can be used as a source for rental verification.
Note: FHA Back To Work Program has been discontinued: Above information is for archival purposes
Purpose For FHA Back to Work Program
FHA does recognize that financial hardship do happen to the very best of us as well as financially responsible individuals.
- The financial collapse and meltdown of 2008 has caused financial ruins to millions of Americans and have skyrocketed bankruptcies and foreclosures to historical levels.
- FHA also recognizes that people’s credit histories may not totally reflect the borrowers true ability or propensity for them to repay a mortgage.
FHA Loans For First Time Home Buyers And Buyers With Bad Credit
FHA insured mortgage loans are an excellent way for first time home buyers and for home buyers with less than perfect credit or high debt to income ratio become homeowners at affordable mortgage rates.
- It makes home ownership possible for home buyers with lower credit scores and prior credit issues who cannot qualify for mortgage loans backed by Fannie Mae or Freddic Mac possible.
- There are steep fees associated with FHA loans such as a 1.75% upfront mortgage insurance premium as well as an annual mortgage insurance premium of 1.35%.
2017 Update To Home Loan Programs After Bankruptcy And Foreclosure
The FHA Back To Work Extenuating Circumstances Mortgage Loan Program has been discontinued. However, there are new home loan programs after bankruptcy and foreclosure that The Gustan Cho Team at USA Mortgage offers.
- NON-QM Loans do not have any waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale.
- However, 10% to 20% down payment is required on home purchases and mortgage rates are normally 2% percentage points or more higher than standard conventional mortgage interest rates.
- To qualify for 10% down payment NON-QM Loans, borrowers need to have at least a 680 credit scores. 660 credit scores requires 15% down payment.
- The minimum credit score required for NON-QM Loans is 640 credit score with 20% down payment.
Bank Statement Mortgage Loans For Self Employed Borrowers
Another type of NON-QM Loans is the Bank Statement Loans For Self Employed Borrowers