During the financial crisis that gripped us during 2008, millions of homeowners had to deal with things they never thought they would have to consider. Some had to file bankruptcy in order to keep their financial house in order, others lost their homes to foreclosure and still others dealt with the financial crisis by selling their homes under a short sale agreement. Unfortunately, under previous regulations, most of these homeowners were doomed to be ineligible for a loan for periods of up to ten years. However, in 2013, the FHA offered some relief to these homeowners by offering the FHA Back to Work program.
What is the FHA Back to Work Program?
The Federal Housing Administration (FHA) realized that millions of homeowners were facing adversity due to the financial crisis. They understood that many homeowners who lost their homes had previously had good credit ratings, paid their mortgages on time and fell victim to circumstances beyond their control. Hence, they started a program for those who were facing adversity that would allow them to qualify for a mortgage in one year rather than waiting ten years.
How does the FHA define adversity?
Under the terms of this program, the FHA requires the borrower demonstrate they lost at least 20 percent of their income for a period of six months or more. The 20 percent may seem like a general number but those who were collecting unemployment were typically receiving 80 percent of their “pre-layoff” salary.
What about the negative entry on my credit?
Clearly your credit report will reflect whether or not you have had a bankruptcy, foreclosure or gave a deed in lieu of foreclosure. However, the FHA is far more interested in what your credit was before and after this financial crisis. If you had a good payment history before this problem and you have taken steps to work on your credit since you had a foreclosure, you can still qualify for a new mortgage loan.
What paperwork do I need?
In order to qualify for a Back to Work loan, you will have to provide much of the same documentation as you would for any other mortgage loan. Additionally, you will have to show you have been saving money and paying all of your bills on time.
For some borrowers who lost their home, getting started as quickly as possible after a foreclosure or short sale means they can get back into a home faster than ever. Whether you have just lost your home or you have taken the necessary steps to get back on the right track, contact 1st Alliance Lending. We can help you with each stage of securing a loan for your new home. Whether you need help with your credit repair process, rebuilding your credit or you are ready to sign up for the required homeowner’s counseling, we are here and ready to help.