Do You Qualify For FHA Back To Work Mortgage Loan

This ARTICLE On Do You Qualify For FHA Back To Work Mortgage Loan Was PUBLISHED On March 24th, 2014

The United States Housing and Urban Development also referred to as HUD, has launched the new FHA Back to Work Extenuating Circumstances due to an economic event mortgage program:

  • This mortgage program shortens the waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale to a one year mandatory waiting period versus the traditional two to three-year waiting period
  • The FHA Back to Work mortgage loan program has strict mortgage lending guidelines with regards to qualification requirements
  • All FHA Back to Work mortgage loan programs are manual underwrites
  • Each case is reviewed by the mortgage underwriter on a case by case basis
  • There are strict guidelines that FHA Back to Work borrowers need to adhere to
  • All items stated on the preliminary letter of explanation need supporting documents
  • The team at Gustan Cho Associates originate many FHA Back to Work Extenuating Circumstances due to an economic event mortgage application
  • GCA Mortgage Group are experts with these types of mortgage loans
  • On another note, mortgage underwriters have a lot of influence and weight FHA Back to Work mortgage loans

In this article, we will discuss and cover the FHA Back To Work Mortgage Guidelines.

Underwriter’s Discretion

What is the insurer's discretion

Underwriter’s discretion is what decides if the FHA Back to Work mortgage will proceed forward or will be denied.

  • Many lenders who work with FHA Back to Work Extenuating Circumstances due to an economic event have gone through learning curves since it is such a new mortgage loan program
  • Just because one mortgage underwriter denies an FHA Back to Work mortgage does not mean that the borrower will not qualify with another mortgage company
  • The way the first mortgage underwriter is interpreting the letter of explanation can fall within the gray area
  • I have many cases where one lender has denied an FHA Back to Work mortgage loan application but has gotten approved by a different lender

Do you qualify for HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program?

Do You Qualify For FHA Back To Work Mortgage Loan?

HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program is not for everyone.  Do you qualify for FHA Back to Work mortgage loan?

  1.  Have you had a history of good credit?
  2. Have you been terminated by your employer due to the economic collapsed and have been unemployed for at least six months which has resulted in the reduction of your household income of at least 20% or more?
  3. Due to unemployment, did you have to file for bankruptcy or had to go through a foreclosure?
  4. Did your credit scores suffer due to your unemployment or underemployment and the result of your bankruptcy and/or foreclosure?
  5. Are you now employed full time?
  6.  Have you re-established your credit and did not have any late payments since your bankruptcy, foreclosure, and since you gained full-time employment?

If all of the above answers is YES, then you are the perfect candidate for HUD’s new FHA Back to Work extenuating circumstances due to an economic event mortgage loan which shortens your waiting period to a one year waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, and/or short sale.

Those Who DO NOT Qualify For FHA Back To Work 

Which means Those who are NOT eligible to return to work with the FHA

HUD’s Back to Work mortgage loan program is not for everyone.  There are those home buyers who had prior bankruptcies, foreclosures, deed in lieu of foreclosures, and/or short sales who did have extenuating circumstances but unfortunately, do not qualify for the FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program.  Here are cases where home buyers do not qualify for FHA Back to Work mortgage loan.

If you voluntarily quit your job and could not find another job:

  • A good case scenario will be when someone voluntarily quit their job to look for another job
  • This person realized that finding a better job was not as easy as he or she thought it would be
  • The borrower went unemployed longer than expected which he or she could no longer afford to make his or her mortgage payment and was forced into foreclosure and/or bankruptcy
  • In this case scenario, the bankruptcy and/or foreclosure may have been caused due to unemployment and/or underemployment
  • But this borrower does not qualify for HUD’s FHA Back to Work due to voluntarily leaving his or her job
  • Voluntary leaving an employer does not count as being out of work
  • Another case scenario is when a person quits a particular job in one state and moves to another state in search of new work and cannot find work and due to this, files bankruptcy
  • This would not qualify for HUD’s Back to Work because, again, he or she left the job voluntarily and could not find work

Divorce:

  • A divorce does not count.  Even though a divorce can cause a dramatic loss of household income
  • There are many bankruptcies and foreclosures due to the outcome of the divorce
  • Examples include bankruptcy and/or foreclosure as a result of divorce due to the reduction of household income
  • Divorce does not qualify a borrower for HUD’s FHA Back to Work Extenuating Circumstances due to an economic event mortgage program

Medical issues:

There are so many cases where the head of the household needs to quit their jobs in order to take care of a family member who had major medical issues:

  • The medical issues can end result can be the person filing bankruptcy or going through a foreclosure
  • Unfortunately, this does not qualify for HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program

Late payments prior to your economic event:

  • If you had a history of bad credit prior to your economic event
  • And have not established your credit
  • You still have recent late payments on your credit report
  • If the borrower meets all of the other FHA Back to Work guidelines, you will not be able to qualify for FHA Back to Work

FHA Back To Work Mortgage Loan Program: Qualification Requirements

If you qualify for HUD’s new FHA Back to Work Mortgage, the first thing you need to do is write a detailed, thorough letter of explanation and provide supporting documents along with the lox.  Your mortgage loan originator will most likely present your lox to an FHA Back to Work mortgage underwriter to see if you qualify.  Once your loan originator gets the FHA Back to Work underwriter, you can now proceed with your mortgage approval process.  You need to complete a one-hour HUD-approved housing course and get a certificate of completion dated and signed by the HUD’s housing counselor.  You cannot start the mortgage application process until 30 days after the date of the housing certificate completion.  Your mortgage application can be signed by you on the 30th day after the issuance of the housing certificate.  You can go shop for a home and can enter into a real estate purchase contract in the interim.  If you are a home buyer in Illinois, Florida, Wisconsin, California, Indiana, and are interested in HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event mortgage loan program, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at gcho@gustancho.com. Please visit us at www.gustancho.com.

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