NON-QM Loans Versus FHA Back To Work
This BLOG On NON-QM Loans Versus FHA Back To Work Was Written By Gustan Cho NMLS 873293
HUD recently announced new mortgage loan guidelines that shortens the waiting period for those who have had filed bankruptcy and had prior foreclosures, deed in lieu of foreclosures, and short sales.
- The current waiting period for those who had a prior bankruptcy is a two year waiting period from the date of the bankruptcy discharge.
- For those who had a prior foreclosure, deed in lieu of foreclosure, or short sale, the waiting period is three years from the recorded date of the foreclosure or deed in lieu of foreclosure and three years from the date of the HUD on a short sale.
- The new announcement from HUD is called the Back to Work extenuating circumstances program where it shortens the waiting period for the above to a one year waiting period.
- However, there are rules and restrictions.
NON-QM Loans are portfolio loans offered by The Gustan Cho Team at CrossCountry Mortgage Inc. NMLS 3029 where it has no waiting period requirements after a bankruptcy or foreclosure. Here are what the NON-QM Loan Program at CrossCountry Mortgage entails:
- No Waiting Period After Bankruptcy
- No Waiting Period After Foreclosure
- No Waiting Period After Deed In Lieu Of Foreclosure
- No Waiting Period After Short Sale
Other features of NON-QM Loans are the following:
- Bank Statement Only with no W-2 required
- 30% down payment investment property financing with no tax returns or income verification required
- No loan limits
NON-QM Loans Versus FHA Back To Work Guidelines
The Back to Work extenuating circumstances new HUD guidelines was implemented to assist folks who have lost their jobs or income due to the financial, real estate, banking, and credit collapse due to the Great Recession forcing them to bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.
- The loss of employment or substantial reduction of income is referred to as an Economic Event or extenuating circumstances which allows home buyers to have a much shorter waiting period to purchase a new home.
- The Back to Work extenuating circumstances is not a mortgage program.
- It is an extenuating circumstances which HUD approves home buyers to purchase a home via a FHA insured mortgage loan if they meet HUD’s new guidelines.
- The definition of an economic event by HUD is an isolated occurrence which is beyond the mortgage loan borrower’s control in which its outcome is in loss of job or employment and/or substantial reduction in income in which the outcome is the reduction in the borrowers total household income of at least 20% or more for a consecutive period of at least 6 months.
NON-QM Loans requires 10% to 20% down payment and the mortgage interest rates are generally higher than FHA Loans. However, due to the no waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale, it should just be used as a form of a bridge loan until the borrower can get a traditional end financing once they meet their waiting period requirements. The NON-QM Loan Program at The Gustan Cho Team at CrossCountry Mortgage is an excellent program for home buyers who cannot qualify for a traditional form of financing where they can purchase a home now in areas where real estate values are sky rocketing.
Eligibility Of NON-QM Loans Versus FHA Back To Work
Mortgage loan borrowers who have not passed the required 2 year waiting period after a bankruptcy discharge and who have not passed the mandatory 3 year waiting period after the recording of a foreclosure or deed in lieu of foreclosure or have waiting the mandatory 3 year waiting period after a short sale can qualify for HUD’s new Back to Work Extenuating circumstances one year waiting period after a foreclosure, deed in lieu of foreclosure, short sale new FHA insured mortgage loan if and only if they meet the following requirements:
- Can provide evidence via documentation that the he or she has had a loss of employment and/or substantial reduction in income where either or both of these events has caused a reduction in at least 20% of their total household income and that this economic event has led to them filing for bankruptcy or led to a foreclosure, deed in lieu of foreclosure, or short sale.
- Have re-established credit and have no lates after their bankruptcy or foreclosure, deed in lieu, or short sale.
- Provide 12 months of rental verification.
- Take a HUD approved housing class. The mortgage application cannot be started until 30 days after completion of this course.
- Need to have demonstrated that they have fully recovered by their economic event and have a stable full time job.
- Meet other HUD requirements and FHA guidelines pertaining to credit scores, assets, debts, liabilities, and debt to income ratios.
- The Back to Work Extenuating Circumstances FHA insured mortgage loans are all manually underwritten.
- You need to work with a mortgage lender that does manual underwrites.
FHA Back To Work Turned Out To Be A Major Flop
Since the launch of the FHA Back to Work Mortgage Program, only a fraction of borrowers qualified and closed on the Back To Work loan program. Countless of borrowers literally went through one of the most stressful times of their lives with the FHA Back to Work Mortgage Program because many lenders told them they were pre-approved and it ended up that they never closed on their FHA Back to Work mortgage loan. The FHA Back To Work Extenuating Circumstances mortgage loan program turned out to be one of the worst disasters in recent mortgage history. The good news is that home buyers can now qualify for NON-QM Loans with The Gustan Cho Team at CrossCountry Mortgage Inc. NMLS 3029 and closings are in 21 days or less.
March 5, 2017 UPDATE
The Gustan Cho Team at CrossCountry Mortgage Inc. NMLS 3029 is on track with NON-QM Loans with no waiting period after bankruptcies and foreclosure for home buyers. There are no loan limits and no pre-payment penalties. Bank statements income loan programs are available for self employed borrowers. The NON-QM Loan Program is one of the most popular loan programs at The Gustan Cho Team at CrossCountry Mortgage.