FHA Back to Work Program allows Maryland Home Buyers that experienced a financial hardship to reduce the wait time for getting a new mortgage from 2-3 years down to only 1 year from the date of the event.  FHA announced the Program in August 2013 to allow mortgage lenders to help families and individuals to get back into home ownership after experiencing a financial hardship because of the economic downturn in the U.S. economy.  If you would like to apply for the FHA Back to Work Program to purchase a home in Maryland, please call our office at 410-412-3319 or you can apply online at FHA Back to Work Application

HUD released Mortgagee Letter 2013-26 and made it effective August 15, 2013 which instituted the Back to Work Program for mortgage lenders to reduce the wait period for some borrowers who qualify under the guidelines illustrated below:

  1. The loss of employment or income was due to an extenuating circumstance beyond his or her control and can be documented
  2. A Satisfactory credit history has been restored for a period of 12 months
  3. Housing counseling has been completed

Loss of Employment or Income from Economic Event – The Economic Event is any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrower’s Household Income of twenty (20%) percent or more for a period of at least 6 months.

Onset of an Economic Event – This is defined as the month of the Loss of Employment and/or Income.

Recovery from an Economic Event is the re-establishment of Satisfactory Credit for a minimum of 12 months.  Borrower needs to not have any new collections, judgments, tax liens in this 12 month period.  The borrower can have no more than one 30 Day late on payments due to other creditors.  The borrower must also have the minimum credit score for a FHA loan program which would be at least 580 FICO score in order to only put down 3.5%.  If score is less than 580 then would need to put down at least 10% of the purchase price.

Borrower Household Income – The gross income of the borrower and all Household Members for the purposes of assessing loss of income.  The gross income of each Household Member must be computed in accordance with FHA income requirements.

Household Member – An individual residing at the borrower’s primary residence at the time of the Economic Event and how was a co-borrower on the borrower’s previous mortgage.

Housing Counseling – Housing counseling MUST be completed 30 DAYS PRIOR but no more than 6 months prior to mortgage application!!!  Must be done with HUD approved housing counseling.

The borrower can also have had a loan modification that brought the loan current which may have been “temporary” or “permanent” so long as all payments have been documented as being received in accordance with the modification agreement.

Acceptable documentation for the Loss of Employment by obtaining:

  1. Written Verification of Employment evidencing the termination date or
  2. Written Termination Letter or
  3. Publicly Available documentation of business closure and documentation of receipt of unemployment income

Acceptable documentation for Loss of Household Income:

  1. Written verification of employment evidencing prior income or
  2. Signed Tax Returns or W-2s evidencing prior income

Economic Event – Related Mortgage Foreclosure

  1. Minimum of 12 months have elapsed since the date of foreclosure or deed in lieu and
  2. Foreclosure or deed-in-lieu was the result of the Economic Event

Economic Event – Related Short Sale

  1. Document minimum of 12 months have elapsed since the date of sale and
  2. the Short Sale was a result of the Economic Event

Economic Event – Related Chapter 7 Bankruptcy

  1. Minimum of 12 months have elapsed since the date of discharge of the bankruptcy
  2. Bankruptcy was the result of the Economic Event

Economic Event – Related Chapter 13 Bankruptcy

  1. Chapter 13 bankruptcy was discharged prior to loan application and all required bankruptcy payments were made on-time or a minimum of 12 months of the pay-out period under the bankruptcy has elapsed and all required payments were made on time
  2. Bankruptcy was the result of the Economic Event

If you would like to apply for a FHA back to work loan or have questions about whether you qualify or not, please call our office at 410-412-3319 or you can get started online at FHA Back to Work Loan Application.

John R. Thomas
Loan Officer – FHA, VA & USDA Specialist – NMLS – 38783
Primary Residential Mortgage, Inc.
Maryland Mortgage Company
1220A E Joppa Rd
Towson, MD 21286
410-412-3319 MD Office
302-703-0727 DE Office
610-906-3109 PA Office

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