The “FHA Back to Work” program established in August 2013, has been extended to September 30, 2016 giving more people a chance to apply for a new home.
The Federal Housing Administration (FHA) Back to Work program allows homeowners who lost their home in a short sale, foreclosure, deed-in-lieu of foreclosure or had to declare bankruptcy to have a second chance of owning a home.
If the person qualifies, they can purchase a new home 12 months after their loss through an FHA fixed-rate mortgage. Previously, the homeowner had to wait 36 months before buying another home.
In order to qualify, the person would have to show specific documents showing the financial problems that caused the loss. If the hardship was due to extenuating circumstances beyond their control, chances are they’ll be in a new home in a year’s time. The person would have to explain how the financial hardship was something beyond their control, such as unforeseen medical bills/serious illness, death of a spouse, or a job layoff. The borrower will have to prove they had no other recourse than to foreclose, short sale or file bankruptcy.
Their household income had to have dropped 20% or more for at least six months. They must also complete Housing and Urban Development (HUD)-approved housing counseling.
The HUD-approved counselor has to assess their debt, the ability to afford the mortgage, explain the features of mortgage, mortgage insurance and the loan application process. The counseling has to be completed 30 days before the person applies for a new mortgage. A certificate is given at the end of the counseling, and is valid for 6 months.
Circumstances such as the inability to sell the property due to a job transfer or relocation to another area are not accepted as extenuating circumstance.
The program requires the borrower to re-establish their credit with 12-months of on-time rental housing payments with no delinquencies and not have been 30 days late on more than one non-housing loan payment. If there are any open collection or judgment accounts, an analysis will be done to see if the person can repay those creditors.
In the past, FHA lenders issued faulty loans and relied on automated underwriting. With this Back to Work Program, borrowers will be scrutinized more carefully. In the long run, getting more qualified homebuyers back into the sluggish housing market will help the overall market.
A HUD official recently stated the agency believes there are a number of people who were negatively impacted by the Great Recession who have the capacity to get back into the housing market.
The recession caused many to lose their jobs, and consequently, their homes. There were a lot of innocent bystanders that were hurt, especially in job layoffs. This second chance of ownership can help families restore their lives.
Keith A. Gantenbein, Jr. is a licensed, Colorado consumer rights attorney, focusing his practice as a foreclosure defense attorney and real estate attorney located in Denver and servicing all of Colorado. His foreclosure defense practice includes Colorado foreclosure help: foreclosure prevention, judicial foreclosure, HOA foreclosures, foreclosure assistance, loan modifications, short sales, and all other foreclosure defense legal assistance. HIs real estate practice includes real estate closings, title issues, lien issues, quiet title, real estate contracts, bankruptcies, mortgage negotiations, lender liability, real estate, civil litigation, evictions, contracts and landlord/tenant. His real estate practice also focuses on his practice as an HOA defense attorney in Colorado, defending homeowners against HOA claims in HOA lawsuits and defense against wrongful covenant enforcement.
If you think you will be facing foreclosure, or are in the foreclosure process, or have had a wrongful foreclosure, contact Denver foreclosure defense attorney Keith Gantenbein at (303) 618-2122 for a one-hour consultation, where he will discuss your situation and go over all your options with you.
Gantenbein Law Firm practice includes Colorado Foreclosure Defense, Colorado Real Estate Law, Colorado and Federal Tax Law, Colorado Business Law, Credit Dispute and Credit Repair, and Colorado Wills & Trusts. For more information, visit our website: www.gantenbeinlaw.com
Gantenbein Law Firm also specializes in Federal and Colorado Tax Law. If you are facing an IRS tax audit, IRS tax appeal, tax litigation, or need help with an IRS installment plan or IRS offer in compromise, contact our Denver tax attorney immediately at 303-618-2122. Or, visit our Denver tax attorney website here