On Aug. 15, 2013, the Federal Housing Administration (FHA) implemented a new program titled "Back to Work." This program seeks to help borrowers that would otherwise not qualify for an FHA mortgage because of FHA's waiting periods for foreclosures, bankruptcies, deeds in lieu or short sales, as well as borrowers with delinquencies, judgments or other indications of derogatory credit. FHA recognizes the hardships faced by many borrowers during the recession and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.
To qualify for this program, borrowers need to demonstrate that:
- Certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower's control;
- The borrower has demonstrated full recovery from the event; and,
- The borrower has completed housing counseling.
When working with a buyer who is qualified for the Back to Work Program, REALTORS® should make sure they have a clear understanding of their client's housing counseling responsibilities. The housing counseling is a critical component of the program and must be completed a minimum of 30 days but no more than six months prior to submitting a loan application to a lender. Borrowers must receive homeownership counseling or a combination of homeownership education and counseling provided that each participant receives, at a minimum, one hour of one-on-one counseling from HUD-approved housing counseling agencies. The counseling must address the cause of the economic event and the actions taken to overcome the economic event and reduce the likelihood of reoccurrence. The housing education may be provided by HUD-approved housing counseling agencies, state housing finance agencies, approved intermediaries or their sub-grantees, or through an on-line course.
For more information on FHA's "Back to Work" program, please click here.
Watch YPN Lounge Video Blog on FHA's Back to Work Program. REALTOR® Derek Sandoval from Keller Williams Realty in Roseville, California, and Noel Brownell of Comstock Mortgage explain the new program further.