Mortgage Programs After Bankruptcy And Foreclosure

This BLOG On Mortgage Programs After Bankruptcy And Foreclosure Was Written By Gustan Cho NMLS 873293 of CrossCountry Mortgage NMLS 3029

HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event shortens the waiting period to one year after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.  The current waiting period for those who had a prior bankruptcy is a two year waiting period from the discharge date of the bankruptcy.  For those who had a prior foreclosure, deed in lieu of foreclosure, or short sale, the waiting period is 3 years from the recorded date of the foreclosure or deed in lieu of foreclosure or the date of the sheriff’s sale or the date of the HUD settlement statement for those with a prior short sale.   Home buyers who were unemployed or underemployed and had a significant impact on their household income for the six months prior to the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale can now qualify for the one year waiting period FHA Back to Work Extenuating Circumstances due to an economic event.

2017 UPDATE ON FHA BACK TO WORK MORTGAGE: This mortgage loan program turned out to be a major disaster and most lenders have discontinued offering this loan program. The Gustan Cho Team at CrossCountry Mortgage offers NON-QM Loan Programs After Bankruptcy and Foreclosure where there is no waiting period.

FHA Back to Work Qualification Requirements

To qualify for the HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan, the first step is to write a letter of explanation detailing the economic event. 

  • The mortgage loan borrower needs to have been fired, unemployed, or underemployed for at least six or more months leading to the initiation of the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale which has led a 20% or more reduction in their household income.
  • Folks who quit their jobs voluntarily will not qualify.  
  • Underwriters will be looking for the borrower’s credit history prior to the loss of employment and expect good credit.
  • After the loss of job, the credit scores will most likely drop and after the bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale, the credit scores will be re-established after they found new employment.
  • For those who had a history of bad credit prior to the economic event will not qualify.  
  • Underwriters expect to see no late payment history and re-established credit after the borrower gets new employment and at least 12 months good credit history.

Other Requirements Of Back To Work Versus Mortgage Programs After Bankruptcy And Foreclosure With No Waiting Period

All Back to Work Extenuating Circumstances due to an economic event mortgage loans are manual underwrites. 

  • The maximum front end debt to income ratios are capped at 31% and the maximum back end debt to income ratios are capped at 43%. 
  • Compensating factors are taken into great consideration. 
  • Compensating factors include rental verification, reserves, low debt to income ratios, and other positive factors that strengthen the mortgage application. 
  • Mortgage loan applications cannot be initiated until 30 days after the borrower completes a one hour HUD approved housing counseling course. 
  • As mentioned earlier, the letter of explanation is the most important first step and will dictate whether the home mortgage loan borrower qualifies.
  • Again, the Back To Work Program turned out to be a disaster where most lenders do not offer it.
  • Mortgage Programs After Bankruptcy And Foreclosure with no waiting period is availble by The Gustan Cho Team at CrossCountry Mortgage and is called NON-QM Loans.

2017 UPDATE: FHA Back to Work Mortgage Turned Out To Be Major Disaster

If you had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale and are interested in HUD’s FHA Back to Work extenuating circumstances due to an economic event mortgage program, DO NOT GO ANY FURTHER. The Back to Work Program was a major disaster and still is. The Gustan Cho Team at CrossCountry Mortgage offers Mortgage Programs After Bankruptcy And Foreclosure with no waiting period requirements.  NON-QM Loans where there is no waiting period after bankruptcy or foreclosure and closing is done in 21 days or less. Please contact me at 262-716-8151 or visit me at www.gustancho.com

Gustan Cho NMLS ID 873293

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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