Monday, January 13, 2014

Back to Work FHA Program

Back to Work – Extenuating Circumstances due to an "Economic Event"

An "Economic Event" is when a borrowers has experienced an occurrence beyond their control, that resulted in a loss of income, loss of employment, or a combination of both. TOTAL Scorecard "Refer" recommendations or the manual downgrade of an "Accept/Approve" recommendation, may be eligible for FHA purchase transaction financing provided all the following requirements are met:

The "Economic Event" lasted at least 6 months; and

The "Economic Event" resulted in a 20% or more reduction in the borrower’s household income;

Documented evidence that the delinquencies were due to the "Economic Event" must be provided;

Borrower must have reestablished a "Satisfactory Credit" history for at least 12 months;

Borrower must have fully recovered from the "Economic Event";

Housing counseling is required, as follows:

The borrower must attended an approved housing counseling program at least 30 days, but no more than 180 days prior to initial application. Counseling must be performed by a HUD approved housing counseling agency, state housing finance agency, approved intermediaries or their sub-grantees.

Counseling may be conducted in person, via telephone, via internet, or other methods approved by HUD.

Upon completion of the required counseling, the borrower will be given a Counseling Certificate of Completion that must include the counselor’s handwritten signature. In instances that the counseling certificate is received electronically or via other means and does not include a counselor’s handwritten signature, the borrower must obtain the counselors signature. This may be accomplished by faxing or emailing the certificate to the counselor to obtain their handwritten signature.

All other HUD requirements must be met, per Mortgagee Letter 2013-26 and the HUD 4155.1.