Tuesday, September 3, 2013

FHA Back to Work Extenuating Circumstances Program

FHA Back to Work Extenuating Circumstances Program

FHA Back to Work Extenuating Circumstances Program image fha back to work extenuating circumstances program1

This program is essentially saying “Hey, sometimes things happen that are out of your control and we get that.” It is meant to help former homeowners who experienced an economic situation that was due to unfortunate circumstances that was out of their jurisdiction. A lot of these situations happen to people who didn’t want to see their credit score drop or were unwilling to pay their mortgage. Sometimes a credit history does not properly reflect a person’s current ability and willingness to pay a mortgage.
Let’s get down to some of the basics of the program. Remember, what I am providing here is only skimming the surface of the program. This program is directed towards people who have experienced an economic event – any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or combination of both, which causes reduction in the borrower’s Household Income of 20 percent or more for the period of at least six months. The 20% loss of Household Income can be demonstrated through W-2s, pay stubs, unemployment income receipts, or other methods that can be recommended by your lender. These economic events can include of
• Pre-foreclosure sales
• Short sales
• Deed-in-lieu
• Foreclosure
• Chapter 7 bankruptcy
• Chapter 13 bankruptcy
• Loan modification
• Forbearance agreements


Those who are eligible for the FHA Back to Work Extenuating Circumstances Program have demonstrated a full recovery from the economic event. Recovery includes of demonstrating a satisfactory credit history since the economic event. This will be documented through your credit history and a review of all of your accounts. Lenders will be looking for three things in order to determine eligibility:
• Your credit history before the economic event
• A decline in your credit score after the onset of the economic event
• Re-establishment of a good credit history with prefect payments for 12 months on major accounts (revolving accounts may have minor delinquencies)
Furthermore, those who are eligible for the FHA Back to Work Extenuating Circumstances Program will be required to complete Housing Counseling – this is an hour long session that can be done in person, online, or via phone with a HUD-approved housing counseling agency. The session will be related to home ownership and residential mortgage loans. It will allow the borrower to address the cause of their economic event and consider actions to take in the future that will prevent a repeat of this event.
Instead of taking anywhere from 2 to 7 years to get back into a house, this program can help borrows get into a new home in as quickly as a year. As stated before, this post only scratches the surface of the FHA Back to Work Extenuating Circumstances Program. If you think this program may help you in any way or you have questions on your eligibility please contact me! I am more than happy to help.