The Federal Housing Administration is helping borrowers through “Back to Work” lenders launched on August 15, the “Back to Work – Extenuating Circumstances” lending program encourages financial stability by allowing families to make a fresh application for mortgage without having to wait for a long period. In the program, lenders are allowing families to apply for a loan just 12 months after losing their home.
Previously, borrowers had to wait a mandatory three years before qualifying for a new loan. In the new mortgage program, those with previous financial hardships can get back on track if they can prove financial recovery. The borrower must show he or she is employed and able to afford monthly loan payments.
The Federal Housing Administration (FHA) is making an effort to support families that have faced extenuating circumstances, one-time occurring events beyond a borrower’s control. These events typically result in a sudden reduction in income or increase in financial obligations.
During an August speech in Phoenix, President Barack Obama said, “We should give well-qualified Americans who lost their jobs during the crisis a fair chance to get a loan if they’ve worked hard to repair their credit.”
These online home mortgage loans are only applicable to families who have faced a bad mark on their credit, such as prior foreclosure, bankruptcy, prior short sales, loan modification or forbearance agreements, and deed-in-lieu according to Mortgagee Letter for the period of 2013-26.
To qualify, the economic event must have caused a 20 percent income reduction for a minimum of six months. The FHA defines an economic event as “any occurrence beyond a borrower’s control that results in loss of employment, loss of income or a combination of both,” according to Mortgagee Letter 2013-26.
Last but not least, it is essential for the borrowers to complete at least one hour of housing counseling. The counseling must be done by a counselor approved by the Department of Housing and Urban Development and must take place at least 30 days, prior to submitting an application to “Back to Work” lenders. Housing counselors typically advise on home purchase, credit issues, foreclosure avoidance and reverse mortgages.
After each requirement is met and the borrower is accepted, he or she may put down only 3.5 percent on a mortgage – another highlight of FHA online home mortgage loans. He or she will not face premiums or additional closing fees.
Many families are hesitant to apply for a new mortgage after unfortunate economic events, but investing in a home is one way to secure a boost in credit. On time, monthly home payments can be the best move families can make.
Not only will families benefit from “Back to Work” lenders, but so will the housing market. With more buyers on the market, fewer homes will sit empty. Families with extenuating circumstances are more likely to buy a home they will keep – these are the folks who really need it. The FHA’s online home mortgage loans are made to work with families’ financial situations and are possibly the key to getting the housing market back in gear.
Source Via: patch.com