New FHA Program Seeks to Give Borrowers Back their Buying Power

It’s no surprise that over the last several years a lot of people have experienced financial problems due to the economic downturn. Now that consumer confidence and employment opportunities have returned (respectively), traditional buyers are looking for ways to get back in the home buying game. 

 Now there is “The Back to Work Extenuating Circumstances Program,” and is designed to allow people who experienced a “Negative Credit Event” like a short sale, foreclosure or bankruptcy during the housing crisis to purchase a home.  Typically these people would have experienced an extended delay of anywhere between two and seven years before they could purchase a home. Through this program, they have an opportunity to get back in within as little as 12 months. The program is going to remain in effect for any applications that have a case number through September of 2016.

In order to be eligible for this program, applicants are going to need to prove four things.

• First, they need to prove that they’re income declined by 20 percent or more for a six month period and that those circumstances were the result of a negative credit event.
• Second, they’ll need to be able to provide documentation if the negative credit event qualifies under the “Job lost beyond applicant’s control” category. This might include publicly available information on a reduction in workforce or that a company closed. Applicants can also look to see if they had unemployment compensation.
• Next, they have to prove that, over the course of the last twelve months, they haven’t had any credit hiccups like a late installment or any new collections or judgments.
• They also have to have a clean credit record for the last 12 months. So, they’ll need to show that they’ve had a positive rental history or that if they’re living with their parents they haven’t had any other credit issues.
• The last criteria is that applicants will have to go through Housing Counseling with an approved counselor no later than six months from the application date and no sooner than 30 days from the application date.
  
  
  Another bonus is that this is an FHA program. So not only does somebody have the ability to get back in after a 12 month delay, they have the ability to do so with a 3.5 percent down payment if they still qualify for that loan type.
  
  
  

  “You may not have thought that you could purchase a home today. But I’m here to tell you that many of you can. Call me for information on the new ‘Back to Work Program’ from HUD so we can try to put you in a position to buy.”