The FHA back to work program: A second chance for homeowners

Scott Sheldon

Image: BrianAJackson

A consumer who sold his or her home in a short sale or lost it in a foreclosure would normally have to wait 36 months to purchase a primary residence again with an FHA fixed-rate mortgage. However, the FHA Back to Work Program allows a buyer to purchase a primary home just 12 months after a foreclosure, short sale or a deed in lieu of foreclosure.

The program — which was announced in 2013, and extended through Sept. 30, 2016 — aims to fulfill a lofty goal: offering families a second chance at homeownership. The sticking point, however, is that you’ll need to specifically document the financial problems that caused you to forfeit your prior home in order to qualify.

How You Can Qualify

In order to qualify for the FHA Back to Work Program, you need to show that the loss of your previous home was truly due to circumstances beyond your control. Unfortunately, the program does not consider previous loan modifications, adjustable-rate loan recasting, inability to rent a previous income property, or even divorce to be sufficient enough reasons to qualify.

Loss of Income

You need to show a 20% loss of income or more for at least six consecutive months leading up to the event to qualify. For example, if the previous foreclosure, short sale or deed in lieu happened due to loss of income, you would meet this requirement if your pre-event income was $100,000, and dropped to $80,000 or lower for six consecutive months beforehand.

How to support your claim: The lender with whom you’re applying will order a verification of employment. The verification of employment would support the dates of when the loss of income occurred. Other supporting documentation would include lower year-to-date earnings with pay stubs within the dates your income dropped. W-2s and/or tax returns that show lower reported wages for that time frame will also meet the FHA requirement.

 

Read the whole story at: https://homes.yahoo.com/news/the-fha-back-to-work-program--a-second-chance-for-homeowners-194837459.html