Back to Work Program Lenders Redefine Mortgage Guidelines

Home mortgage loans are less complex through the FHA’s new program

Families who have struggled with financial hardships now have a more efficient option that allows first-time homebuyers and repeat homeowners to quickly apply for second-chance home mortgage loans.

The “Back to Work” program helps families who have faced an economic event like foreclosure, short sale, deed-in-lieu, bankruptcy, loan modification or forbearance agreement. These families are now able to apply for a new mortgage only 12 months after losing a home. Previously, the waiting period after such events was oftentimes greater than three years.



For millions of families who are still battling with the U.S. housing crash of 2008, the program is nearly a miracle. If the down payment you are able to make is less than 20 percent, a Federal Housing Administration (FHA) loan is right for you. Through “Back to Work,” borrowers may put down only 3.5 percent with no premiums or fees at closing.

Prospective borrowers may be eligible to apply if they are working again, possess a steady income and can prove previous extenuating circumstances through proper documentation. Participating borrowers must be able to meet general guidelines that involves employment, income and credit.

Lenders ensure borrowers have re-established a steady financial life through credit history reports. To be eligible, borrowers must have a 12-month credit history that is clear of late housing, installment debt payments, delinquency and other derogatory credit issues. Prospective participants with credit scores below 500 are not accepted, but those with no credit history whatsoever remain eligible.

If a prospective homeowner has open collections or any judgment accounts, a “capacity analysis” will be completed to determine if the borrower will be able to afford repaying other creditors and a new mortgage simultaneously.

Although an economic event will stay on a borrower’s credit history report for up to seven years, it’s never too late to start recovering. In fact, the FHA requires that all “Back to Work” participants complete at least one hour of one-on-one housing counseling to ensure they have a better understanding of how to become and stay fully recovered.

Counselors teach borrowers how to create and assess a household budget. They also help borrowers avoid scams and become better prepared for future financial shocks. Oftentimes, borrowers just need a small push to regain financial confidence, avoid poor spending habits and a routine of paying bills on time.

To begin the path back to homeownership, interested borrowers may connect with any lender that offers the “Back to Work” program. Borrowers should find a lender that has experience dealing with many other cases of extenuating circumstances. The loan is offered through Sept. of 2016 and can be found in all 50 states. “Back to Work” program lenders will evaluate previous hardships and affordability to ensure the program is right for each family’s situation.

Back to Work Program Lenders Are Approving Loans Now

FHA’s home mortgage loans are ready to be approved through a method that’s easier than ever

The home mortgage process has never been more simple. With Back to Work home mortgage loans, families that have been battling extenuating circumstances may now apply for a new mortgage only 12 months after losing a home.

The housing market crash of 2008 put millions of Americans across the country under the weather. Five years later in August of 2013, the FHA gave these families a second chance.

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

If you have faced foreclosure, short sale, deed-in-lieu, Chapter 7 bankruptcy, Chapter 13 bankruptcy, forbearance agreement or loan modification, the time to apply is now. The program runs through Sept. of 2016.

The letter states, “As a result of the recent recession, many borrowers who experienced unemployment or other severe reductions in income were unable to make their monthly mortgage payments, and ultimately lost their homes.”

Back to Work program lenders are accepting individuals who can prove a loss of employment or income of 20 percent or more for a period of at least six months. If you can provide a W-2 form, a pay stub, an unemployment income receipt or another form of unemployment verification, you may be eligible.

Although you might still be recovering from an economic event, the FHA also requires borrowers to prove satisfactory credit. Borrowers with credit scores below 500 are not accepted into the program, but borrowers with no credit score remain eligible.

A satisfactory credit score proves to lenders that you will be able to repay a mortgage in a timely fashion. If the borrower can show a 12-month credit history that is clear of late housing, installment debt payments, delinquency and other derogatory credit issues, he or she should remain eligible.

Another way the FHA is giving lending agencies peace of mind is through housing counseling. “Back to Work” borrowers are required to participate in at least one hour of one-on-one housing counseling, which is now easier than ever. Families can find participating agencies online at www.hud.gov, and counseling may be completed online, by phone or in person. The agency must be approved by the U.S. Department of Housing and Urban Development.

Counselors ensure that families won’t make the same financial mistakes twice. They teach how to create and assess a household budget, how to avoid scams and how to better prepare for future financial shocks.

The letter states, “Housing counseling is an important resource for both first-time home buyers and repeat home owners.”

If you have faced an economic event, talk to a lending agency that offers the “Back to Work” home loan. These agencies will listen to your situation and keep your best interest throughout the duration of your next mortgage.

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.

FHA Launches Back to Work Program

Mortgage lenders work with housing market crash victims

The 2008 housing market crash created millions of foreclosed homes alongside millions of families in negative financial situations.

The Federal Housing Administration (FHA) released Mortgagee Letter 2013-26 on August 15 of last year, which states, “As a result of the recent recession, many borrowers who experienced unemployment or other severe reductions in income were unable to make their monthly mortgage payments and ultimately lost their homes to pre-foreclosure sale, deed-in-lieu or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts.”



The letter brought forth FHA’s “Back to Work - Extenuating Circumstances program,” which allows families facing an unfortunate economic event to apply for a new mortgage only twelve months after losing a home.

The program waives lending agencies’ traditional three-year waiting period after foreclosure, short sale and deed-in-lieu, and bankruptcy’s traditional two-year waiting period. Borrowers may put down only 3.5 percent with no premiums nor additional fees at closing. Mortgage rates are the same as other FHA rates.

To be eligible, borrowers must be fully recovering from their economic event. “An economic event is 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,” Mortgagee Letter 2013-26 states.

To prove a full recovery, borrowers must show at least twelve months of credit history that is clear of late housing, installment debt payments, derogatory credit issues and delinquency. Credit scores below 500 are not allowed, but borrowers with no credit score remain eligible.

Back to Work program lenders must be able to verify and document a loss of employment by receiving written verification of employment that shows evidence of a termination date or where the borrower’s prior employer is no longer in business.

Borrowers facing Chapter 13 bankruptcy who have yet to be discharged must gain written permission from the Bankruptcy Court to begin a new mortgage. Such document is to be given to their lending agency.

Another way FHA is working with “Back to Work” borrowers is by requiring one hour of housing counseling. The counselor must be approved by the U.S. Department of Housing and Urban Development and address the cause of the economic event.

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.”