The Federal Housing Administration (FHA) was launched in 1934; its primary role being to insure mortgage loans made by FHA approved lenders. Loans are insured by the FHA in each of the 50 states, in the District of Columbia, and throughout all U.S. territories. Since its inception, it has grown to become the largest insurer of mortgages in the world. In 2007, when the global real estate market began to decline, the mortgage and credit crisis that soon followed resulted in low introductory rate mortgages reverting to regular interest rates. That reversion found many folks in hardship to meet their monthly mortgage payments, which unfortunately resulted in foreclosures on countless homeowners across the country.
Due to the continued decline of real estate sales from buyers who could not, or no longer qualified to meet the rules of mortgage lending, the FHA revised some of its qualification guidelines so that former homeowners may only need wait as little as one year after a foreclosure to purchase another home. This resulted in the FHA Back to Work program. Some of the requirements to meet eligibility for this program are as follows:
1. You must have had a financial hardship beyond your control which caused 20% of your income to be reduced sometime in a 6-month period and directly associated with the loss of your home, or you lost employment altogether.
2. You experienced a foreclosure, short sale of your property, deed in lieu, problems with loan modifications, or Chapter 7 or Chapter 13 bankruptcy.
3. You have earnestly tried to re-establish your credit, such as proof of rental payments and utility fees for at least one year with no late notices or fees.
“Pre-Purchase Counseling” may also be required if you wish to begin an application through the Back to Work program. If so, you will need to meet with a HUD approved housing counselor at least 30 days prior to starting the application process. The counselor will explain the loan process and all of its requirements in detail, and evaluate your debt and ability to pay. The cause of your hardship will also be addressed, and suggestions to help you prevent a re-occurrence.
First time homebuyers and repeat home buyers are also eligible to use the FHA Back to Work program. The mortgage approval process is the same for any other FHA insured mortgage, and rates are the same as for any other FHA loan. For further information regarding this program, and help with the steps to apply, please contact us.