FHA offers Back to Work Loans for Mortgage Seekers

Anyone who has been through a financial crisis can understand how difficult the situation can get. After a period of financial hardship, it can be very challenging to start anew. For millions who lost their homes to a short sale, bankruptcy or similar hardships, seeking a new home loan meant that they had to wait for up to 3 years before they could apply for one. FHA launched the Back to Work lending program on August 15, 2013, with a view to help families still going through an unfortunate economic event. With this lending program, borrowers could apply for a home loan again just after a year of an economic event.

The Federal Housing Administration(FHA) defines an economic event as “any occurrence beyond the borrower’s control that results in loss of employment, loss of income or a combination of both, which causes a reduction in the borrower’s household income of 20 percent or more for a period of at least six months.” The household income includes the overall income of a household, not just one member.

Economic hardships such as a prior short sale, deed-in-lieu, forbearance agreement and loan modification are often beyond a borrower’s control. If a family can provide documented proof of an economic event and also prove that their credit score has been showing an upward trend for at least one year, Back to Work mortgage lenders can consider the family for this lending program.

Reentering the market is an important decision for families after they have been through financial hardship. However, before they apply for a second chance at home ownership, the FHA requires that the borrowers must undergo a 1-hour housing counseling session with an agency approved by them. This session could be completed in person, over the phone or online. The session takes a look at the economic event the family has been through and how a similar situation may be avoided in the future.

Housing counseling helps borrowers understand their financial situation better. It makes them better aware of options available to them. Once they are a part of this program, the borrower puts down just 3.5% on their new mortgage, with no premiums and fees at closing.

With a negative financial situation, times can be tough. However, with back to work mortgage lenders, borrowers can once again tread on the path of home ownership. The program ends in September of 2016. While there’s still time, borrowers must look for lenders offering this bracket of FHA loans.

If you, or someone you know has been through an adverse economic event, but are committed to getting past the financial hurdles; it is a wise decision to apply for an affordable home loan thorough the back to work program. Why wait further, if you are eligible now?

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.

Three Things To Know About The FHA’s New Home-Buyer Loans

The FHA’s affordable home-mortgage loans have a new purpose and some new rules

If you are a potential first-time homebuyer or a repeat homeowner who has faced previous financial difficulties, now is a great time to take a step into the housing market for the FHA’s new homebuyer loans.

The FHA created a program designed for anyone who has faced an economic event — any occurrence beyond the borrower’s control that results in a loss of employment or a loss of income of 20 percent or more for a period of at least six months. If you can relate, here are three things you should know about the “Back To Work” program.


1. This loan is designed for families who are regaining financial stability
“Back to Work” was launched to save families who would otherwise be turned away from lending agencies and banks. Since events like foreclosure and bankruptcy stay on a borrower’s credit history for up to seven years, most lending agencies don’t want to risk the chance of a negative event happening again. However, the FHA has recognized that an economic event does not determine whether a borrower can fully recover and repay a loan. The program reduces the long waiting period after losing a home to only 12 months. Normally, families have to wait several years. The program also allows borrowers to put only 3.5 percent down with no premiums or fees at closing.

2. Prospective borrowers must be able to provide proper documentation
Lenders will offer a second-chance mortgage to almost any borrower who qualifies. To be eligible, each person who is signing the loan must be able to provide the lender with proper paperwork that shows proof of a past economic event. The family must also meet general requirements in terms of employment, income and credit. To begin, make clear copies of each signer’s driver’s license and social security card. Gather other necessary items, such as 30 days worth of recent pay stubs, tax returns, W-2 forms, and bank statements. Your statements should include all of your checking and savings accounts, any 401K and other stock accounts. Also be sure to gather the proper documentation for other additional income, such as child support, alimony, Social Security or a pension award. Your lender will need to see all of these items, and possibly a few others, to determine if the “Back to Work” program is right for your situation.

3. The FHA requires participants to complete one hour of housing counseling
For borrowers to become eligible for the FHA’s affordable home-mortgage loans, lenders ask prospective borrowers to complete housing counseling at least 30 days, but no more than six months prior to submitting a loan application. Counselors are required to address the cause of the economic event to ensure borrowers know how to avoid making the same mistakes twice. They also help families create and assess a household budget and teach them how to avoid scams. The overall goal of counseling is to better prepare families for future financial shocks and instill good financial habits.