Mortgage after Foreclosure

The FHA Back to Work Program – mortgage after foreclosure or short sale


Have you suffered an economic event beyond your control such as loss of employment, loss of income, or a combination of both? We may have a homeownership answer for you.

FHA’s Back to Work program allows credit exceptions to traditional guidelines for individuals who have demonstrated a full recovery from an economic event. That means one year after a foreclosure or short sale, you may qualify for a new mortgage.

For example, normally there is a three year wait period after a foreclosure, deed in lieu, or short sale before an FHA mortgage is allowed. However, if the foreclosure or short sale was due to at least a 20% loss of income that can be documented, then a buyer may be approved only one year out instead of the normal three. That’s a big deal!

No waiver program like this has been introduced before, and it shows that FHA recognizes the hardships faced by borrowers due to recession-related periods of financial difficulty and realize that due to these circumstances, a borrower’s credit history may not fully reflect their true ability to repay a mortgage.

Some restrictions do apply including documenting the loss of income, as well as re-established credit (no late payments within 12 months). Bond programs may not be used in combination with Back to Work. And pricing adjustments may apply. Refinances are not eligible. Non-occupant co-borrowers are allowed, as well as gift from family members.

An economic event generally does not include divorce. Situations such as loss of job, loss of hours, or employer going out of business are circumstances that my help you qualify under the FHA Back to Work program.
For more information, or to find out if you are eligible contact me today!

Information valid at time of publishing Feb. 2016.

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