Fha Back To Work Has Ended – Are There Any Other Options?

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
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San Diego, California
www.loansreduced.com
As the FHA Back to Work program has come to an end it has brought up many questions in regards to what options you have available now with a recent economic event. We will be talking about a few different directions throughout this article that can help guide you in a direction to ultimately own a new home.

FHA Back to Work gave homeowners an ability to purchase a new home that could show a 20% pay decline over a period of 6 months which ultimately caused a foreclosure, short sale or DIL. Many people in this situation may also qualify for extenuating circumstance conventional (explained below).

Options for financing outside FHA Back to Work:

Conventional Extenuating Circumstances (starting at 10% down minimum):
Fannie Mae: Nonrecurring events beyond the borrowers control that result in a sudden, significant, prolonged reduction in income or a catastrophic increase in financial obligations. Documentation is required (i.e.: divorce decree, medical reports or bills, notice of job layoff or severance papers..etc.

A letter from the borrower explaining the reason for the event(s) is required along with supporting information the borrower had no reasonable option other than to default on their financial obligations. Reestablished credit is required. The bankruptcy waiting period may be used when a bankruptcy filing includes a foreclosure of property. Document the mortgage loan was discharged through the bankruptcy.

Freddie Mac: Nonrecurring or isolated circumstances beyond the borrowers control such as significantly reduced income and/or increased expenses. The mortgage file must contain the following: a written letter from the borrower stating the cause of the difficulties and how they are unlikely to recur. Third party documentation confirming the events and reestablished credit.
  • Previous foreclosure, deed-in-lieu or short sale within the last 7 years the mortgage must be either:
  • A purchase transaction secured by a primary residence with a max 90% LTV/CLTV/HCLTV
  • A “no cash-out” refinance
  • Evidence of completion of the event is required
For Bankruptcies in the past 7 years the mortgage file must contain:
  • Copies of bankruptcy petition, schedule of debts and discharge or dismissal
  • Evidence all debts not satisfied by the bankruptcy have been paid or being paid
  • Reestablished credit
If you don’t meet the criteria above there is another option!

Option 1:
  • 15% down the day after foreclosure, bankruptcy or short sale with a credit score of 680+
  • 20% down the day after foreclosure, bankruptcy or short sale with a credit score of 620+
  • 30% down the day after foreclosure, bankruptcy or short sale with a credit score of 580+
**Reserve requirements vary between down payment options**

Option 2:
  • 10% down 2 years after foreclosure, bankruptcy or short sale with a credit score of 680+
  • 15% down 2 years after foreclosure, bankruptcy or short sale with a credit score of 660+
  • 20% down 2 years after foreclosure, bankruptcy or short sale with a credit score of 620+
**Reserve requirements vary between down payment options**

Interest rates do vary depending on credit score, how long ago the event occurred, whether there is multiple events, how much you’re willing to put down, property type and occupancy type. Please feel free to call me for more information regarding any of the programs I have listed above at: 619-379-8999
 
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