The FHA Back to Work Lending Program brings Good News for those who recently experienced a Short Sale, Foreclosure or Deed-in-Lieu on their home.
The waiting period reduction affects people that lost their homes from either:
- Short Sales
- Foreclosure
- Bankruptcy
- Deed in Lieu of Foreclosure
They used to have to wait several years before they could obtain a new loan for the purchase of another home. FHA Changes now state that those that suffered these hardships can buy again 12 months after the hardship.
FHA Back to Work Lending Program guidelines state that borrowers will be considered if they have experienced and Economic Event and that:
- certain credit impairments were the result of a loss of employment or a significant loss of household income beyond the borrowers control.
- The borrower has demonstrated full recovery from the event; and,
- The borrower has completed housing counseling
Borrowers that may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for a FHA-insured mortgage,” according to Mortgagee Letter 2013-26 dated Aug 15.
But lenders may find the documentation and other requirements will take a lot of work and leave them open to second guessing by auditors.
Lenders will responsible for meeting the guidelines and all other HUD requirements before making the loan under FHA Back to Work.
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