New FHA Policy for buyers.

This is great information for those who have been victims of the real estate crisis.

Shortsale? Foreclosure? Bankruptcy? You may NOT have to wait 3 years or more to buy your next home under the new HUD “Back to Work” initiative announced August 15th. If you qualify for the program, you may already be able to purchase a home as an owner/occupant with an FHA loan.

Eligible borrowers would be those who experienced a “significant loss of income due to circumstances beyond the borrower’s control” which in turn triggered an “economic event” that impacted their financial status.

 An “economic event” is defined as one of the following:

Short sale
Deed-in-lieu of foreclosure
Foreclosure
Chapter 7 bankruptcy
Chapter 13 bankruptcy
Loan modification
Forbearance agreement

 “A significant loss of household income due to circumstances beyond the borrower’s control” is defined as a loss of 20 percent or more of the total combined household income of the borrowers. Job loss, death of one of the principal borrowers, medical emergency, etc. could qualify as a circumstance beyond the borrower’s control. That loss of income must have been sustained for a period of no less than six months and have occurred prior to the one of the economic events as defined above.

In other words, the borrower cannot just have walked away from the previous home or declared bankruptcy just because they were upside down in a home and it seemed financially “smart” to do so.  The borrower had to have suffered a catastrophic event not of their own making which resulted in a large enough loss of income that made it impossible for them to meet their financial obligations.

To be eligible for the Back to Work Program, the borrower will have to:

• document the extenuating circumstances that led to the previous loss of income
• demonstrate that they have now recovered fiscally and have the financial resources to make their mortgage payments (credit scores, down payment, income)
• complete housing credit counseling by an approved HUD agency
• re-establish a 12 month history of perfect payment history on major accounts after the “economic event”
• be an owner/occupant

Want to find out if you qualify for a mortgage under the Back to Work program? Call me at 904-210-6399 or email me at bobeck.liz@gmail.com, and we will put you in touch with a mortgage lender that can answer your questions and help you through the process. Home ownership may be closer than you think!