Tuesday, September 3, 2013

New FHA Program Seeks to Return Foreclosed Borrowers to Homeownership

New FHA Program Seeks to Return Foreclosed Borrowers to Homeownership

That's good news for borrowers who lost their home due to specific financial hardships but can now demonstrate they have regained previously lost financial ground. The list of eligible financial hardships reads like a list of housing crisis woes:
• Chapter 7 or Chapter 13 bankruptcy
• Deed-in-lieu
• Forbearance
• Foreclosure
• Loan modification
• Loss of income, employment or both that totaled at least 20 percent of previous earnings for at least six months – including copies of applicable termination notices or changes in employment status
• Pre-foreclosure sales
• Short sales
Additionally, consumers must also meet other verifiable measures to participate in the program:
• Proof of borrower's current income – usually W-2 forms or federal tax returns that show the desired mortgage would be affordable and sustainable;
• Credit history before and after the eligible hardship event that is free from late payments or other major credit issues, including rental housing payments and accounts delinquent by 30 days or more;
• Credit score of at least 500;
• Housing counseling by a HUD-approved counselor at least 30 days but no more than six months before submitting an FHA application.
For consumers meeting all of these criteria as well as other standing FHA mortgage guidelines, the Back to Work program is now available nationwide through FHA-approved lenders. Once participating lenders determine that mortgage applicants meet all eligibility and policy criteria, the same 3.5 percent minimum FHA down payment requirement will apply. Mortgage insurance and closing costs will also apply.
Only one FHA program is ineligible fo