Back to Work Lending Program: Changing Dreams into Reality

As per data from Realty Trac, a foreclosure listing company, more than 4 million foreclosures were completed between January 2007 and December 2011. Towards the end of December 2011, More than double these numbers of foreclosures were in the process; approximately 8.2 million!

The housing market crash affected millions of families, forcing them to let go of their nest eggs, the homes they owned. The struggling economy is still on its way to recovery. People who have lost their homes due to a financial crisis try their best to face the situation. They are committed to paying off their debts, committed to improving their credit scores and are now re-entering the market in a much stronger position.

FHA’s back to work lending program has raised the hopes of affected families. The program, launched on August 15th of 2013, is aimed at helping creditworthy Americans who are now re-employed and wish to re-build their home.

Under this program, borrowers who have been through extenuating economic hardships can re-enter the market just a year after losing their home and obtain an FHA mortgage. Earlier, borrowers had to wait for at least three years before they could apply for a government loan. The back to work lending program has been welcomed by borrowers across America, who have found a new hope for their dream home.

However, there are certain strings attached to this opportunity! Not all borrowers can take part in the program. Let us talk about what qualifies one to benefit from this program.

Borrowers must prove their difficult economic circumstances such as a bankruptcy, short sale, deed-in-lieu or loss of employment, for at least 12 months. They must submit documented proof of their financial hardship. Also, they must show that there has been a 20% reduction in their household income, at least 6 months before they defaulted on the loan.

Further, their credit scores must be good for at least 12 months after the financial event they have been through. A minimum score of 500 is a must, however, those with no credit score can also qualify.

Last but not least, the borrowers are required to take a 1-hour counseling session from a Housing and Urban Developing (HUD) agency at least 30 days prior to filing a new loan application. This may be done over the phone, in person, or online. This counseling helps borrowers understand issues such as loan options and obligations, budgeting, and how to avoid scams; among other things.

With the back to work loan program, many individuals are now able to enter the housing market again by applying for new mortgage loans. The market is definitely seeing a greater number of buyers, with fewer homes lying vacant.

What the affected borrowers need is a helping hand that can lead them to their dream. Choosing the appropriate lender can determine how smooth the process of re-entering the market can be.

The tricky documentation work, choosing an appropriate loan amount and weighing the loan obligations can be daunting subjects for borrowers. Borrowers must work with an experienced lender who can make the complete process much simpler and faster.