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.

Relive Your Dream with the New Back to Work Lending Program

In the tough economic times of today, it is often very difficult for people to even meet the daily necessities of life. For many Americans, the housing market crash in 2008 came as a final blow, and many families lost their homes. Thousands are still struggling to cope with the aftermath and are struggling to get back on the journey to home ownership.

The New back to work lending program is a ray of hope for affected families to reenter the market through a new mortgage loan. Families affected by adverse economic events such as the pre-foreclosure sale of a house, a short sale, bankruptcy or forbearance agreements, can now get back to home ownership.

What is the back to work lending program?
Designed to give another fair chance at a successful mortgage to families affected by an economic downturn, this program was launched in August 2012. The Federal Housing Administration (FHA) insures mortgage loans in all 50 states, including the District of Columbia.

How does back to work lending help?
Since the program waives the 3-year waiting period, families can apply for a new mortgage after just one year of losing their home. Before applying, families have to undergo counseling for at least one hour by a housing counselor. Issues such as credit issues, home investment, reverse mortgages and foreclosure avoidance are discussed at length. This is a mandatory session and must be completed at least 30 days prior but no more than 6 months before they apply for the new loan.

Although, the mortgage rates are almost the same as FHA loans, by being a part of the new back to work lending program, borrowers may put down just 3.5% on a new mortgage. Also, they don’t have to bear a premium on their interest rate or additional fees at closing.

Eligibility conditions:

• Borrowers must work with a home mortgage lender who offers the back to work program.
• Borrowers must have been through an adverse economic event.
• Borrowers must be able to reflect their ability and disposition to make regular monthly payments.
• Borrowers must attend a counseling session on home ownership.
• In the last 12 months prior to applying for the new home mortgage loan, borrowers must reflect a fair credit history. There must not be any delinquency in the past one year of applying.

If home owners can prove their past economic hardships, their full recovery and complete the housing counseling, a back to work loan is just right to help them. Borrowers aspiring to own a home again must find a FHA-approved lender to get started. It will only be a matter of time before they move into their new home.

Back to Work Program Lenders

Did you have a past financial hardship (lost job, reduction in income, etc.) that caused you to lose your home?  If you had a foreclosure or declared bankruptcy but are now regaining your financial stability feel encouraged.  A new home may be in your near future!  You may qualify for a new home loan under the Federal Housing Administration Back To Work Program.  The Federal Housing Administration (FHA) recognizes that many homeowners struggled with unemployment or wage reductions as a result of the recent recession.  These extenuating circumstances made borrowers unable to meet their monthly mortgage payments.  Unfortunately the result was they ultimately lost their homes.  If this situation describes you be reassured.  The new Back to Work Program allows borrowers to purchase a new home 12 months after the previous foreclosure or bankruptcy.    

1st Alliance Lending is a Back to Work Program Lender that will work closely with you to help you navigate your options for returning to home-ownership.  We will guide you every step of the way.  

1st Alliance Lending can help you determine if you meet the FHA loan requirements which include documenting the mortgage issues you experienced that were caused by the financial hardship, showing that you have rebounded and re-established your credit, and completing housing counseling.  To verify that you have re-established your credit you need to pay your rental payments on time for 12 months and not be 30 days late on more than one other loan payment.  The housing counseling course is approved by the Department of Housing and Urban Development (HUD).  The course counselor will work closely with you to verify your ability to afford the mortgage, help you establish your household budget and explain the loan application process and mortgage insurance.  This will help insure success with your new home.

1st Alliance Lending takes pride in helping borrowers obtain mortgages they can afford long term.  We frequently work with borrowers who have had a financial hardship and are re-entering the housing market.  We want to help you have a successful mortgage long into the future.  Contactus if you would like to find out more about the Back to Work program.

The Back to Work Lending Program Changes the Future of Mortgages

What happened in 2008 and what the Back to Work loan program is doing now

When a dramatic rise of mortgage delinquencies and foreclosures began to spark in 2007, the housing market had no path of return after many financial institutions closed their doors by Sept. of 2008. Housing experts note that the crash’s main cause was sub-prime lending; this is referring to loan arrangements with high interest rates for borrowers with poor credit histories.

From 2004 to 2006, sub-prime mortgages rose from 8 percent to 20 percent, according to the University of North Carolina’s Department of Statistics. Over 90 percent of sub-prime mortgages in 2006 were adjustable rate, meaning its rate will change in accordance with the market’s conditions. By 2007, adjustable rates began to reset with higher interest rates, causing higher monthly payments for borrowers. The number of mortgage delinquencies began to soar and global investors became uninterested in purchasing mortgage-related securities.

Borrowers began to dramatically change financial paths, applying for foreclosure, short sale, deed-in-lieu, forbearance agreement, loan modification, Chapter 7 bankruptcy and Chapter 13 bankruptcy. The Federal Housing Administration (FHA) now calls each of these financial situations “economic events,” which happen in result of a loss of employment or income of 20 percent or more for a period of at least six months.

After five years of battle, the FHA developed the “Back to Work - Extenuating Circumstances” program to help recovering families. Traditionally, lending agencies required borrowers to wait several years before applying for a new mortgage loan after an economic event. Through the program, families may apply for a new mortgage only 12 months after losing a home. Borrowers may put down 3.5 percent on a mortgage with no premiums nor fees at closing.

Lenders must be able to verify and document a borrowers’ loss of employment or income through a written document that shows evidence of a termination date or where a prior employer is no longer in business.

Interested borrowers are required to complete housing counseling, which is a one-hour session with an expert approved by the U.S. Department of Housing and Urban Development. Counseling must address the cause of the economic event and may be completed in person, online or by phone.

Mortgagee Letter 2013-26 states, “Housing counseling is an important resource for both first-time home buyers and repeat home owners.”

The Back to Work lending program also requires all borrowers to have a satisfactory credit history for at least 12 months. Credit scores below 500 are not allowed in the program, but borrowers with no credit score remain eligible. Late housing, installment debt payments and delinquency negatively affect a borrower’s eligibility.

Distressed families still looking for a new home mortgage can contact a lending agency that offers the Back to Work loan program. The program runs through Sept. 30, 2016.

The Back to Work Lending Program Supports New Homebuyers

The two most beneficial tips for recovered home-buyers back in the market

The Back to Work loan program has made it possible to apply for a new mortgage only 12 months after an economic event. After a situation like bankruptcy or foreclosure, it can be frightening to begin the move from an apartment or another shelter, to a house that you can call your own. Here are two often-forgotten ideas that will make your transition smoother.

1. What is your budget?

This may seem like a silly question, but many families don’t know what they can afford. It is easy to overestimate what is affordable when each living cost is yet to be pieced together.

Earnest money is the deposit made on a home after a family submits an offer. This proves to the seller that you are serious about buying the house. A down payment is an initial and partial payment made at the time of settlement. The Back to Work lending program allows borrowers to put down only 3.5 percent on a new mortgage.

As soon as you move in, there will be other factors to consider as well, like heating and cooling, water and electricity. Don’t forget other living expenses, such as food, internet, cable, car insurance, fuel and cell phones.

To avoid making the same mistakes twice, families should have a back-up plan for handling the loss of employment or income. If the main provider lost his or her job, would the family be able to continue paying the mortgage? Does the family have a sufficient savings plan?

Calculating these numbers can become complicated and stressful, which is why most families avoid budgets. However, it becomes much easier when families keep track in an Excel file or other documenting program. “Back to Work” lending program participants are required to complete at least one hour of housing counseling, in which the counselor can help create or assess a household budget.

2. Create a “wants” and “needs” list.

Although a fireplace, a finished basement or backyard pool sound great. Extra wish-list items only make homes more costly, especially when there are other financial factors to consider. Your family’s needs should be your first priority.

Location is key. Consider how close your desired location is to your job, your children’s school and the supermarket. Look into whether public transportation is an option and if the garage will fit your family’s vehicle. Some neighborhoods have strict rules about parking on the street, fencing and sheds.

Townhouses, condominiums and duplexes will each have different ways of landscaping and disposing of garbage. Creating a list of what will be truly beneficial to your family will narrow your choices down to the perfect home that will make the “Back to Work” loan program a successful one.

Back to Work Lending Program Waives Waiting Periods

Families battling foreclosure, bankruptcy and other events are ready for a new mortgage with the “Back to Work” loan program


FHA back to work program lender by 1stalliancelendingllc

Last August, the Federal Housing Administration (FHA) began sharing their support for families facing unfortunate economic events. The administration launched a program that waives lending agencies’ traditional three-year waiting period after foreclosure, short sale, and deed-in-lieu, as well as the two-year waiting period after bankruptcy.

The Back to Work lending program is designed for families facing an economic event, which the FHA defines 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.” This applies to everyone in the household, not only the borrower.

To verify a loss of employment, lending agencies must obtain a written document that shows evidence of termination or where the borrower’s prior employer is no longer in business.

Borrowers that have yet to be discharged from Chapter 13 bankruptcy must gain permission from the Bankruptcy Court before beginning a new mortgage, which also must be verified by lending agencies.

The program’s popularity derives from the housing market crash of 2008, when millions of families lost their homes after becoming unable to repay their mortgages. Now, these borrowers may put down only 3.5 percent on a new mortgage with no premiums nor additional fees at closing.

Mortgagee Letter 2013-26 states, “FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.”

To become eligible for the program, borrowers must complete at least one hour of one-on-one housing counseling in person, by phone or online. The counseling must be completed a minimum of 30 days, but no more than six months prior to submitting an application. The U.S. Department of Housing and Urban Development provides applicable agencies on its website, www.hud.gov.

The FHA’s letter states, “Housing counseling enables borrowers to better understand their loan options and obligations, and assists borrowers in the creation and assessment of their household budget, accessing reliable information and resources, avoiding scams, and being better prepared for future financial shocks, among other benefits to the borrower.”

Housing counseling also gives borrowers a better idea of how to obtain satisfactory credit, which is another requirement to be eligible in the Back to Work loan program. Satisfactory credit means the borrower’s credit history is clear of late mortgage, installment debt payments, derogatory credit issues and delinquency.

If a borrower’s lending agency is not yet participating, it’s not too late to find a new one. There are participating agencies in all 50 states and the program ends Sept. 30, 2016.