What’s the deal with the Federal Housing Administration’s “Back to work” program?


Good news? The bank took your home but now they have decided that if you had an economic hardship you should get to buy another home. Perhaps the zilions of foreclosures during the great recession were not due to economic hardship and the collapse of the housing market? At any rate this is supposed to be good news.

“FHA “Back to Work” Program

On August 15, 2013, the Federal Housing Administration moved to relax its guidelines for borrowers who “experienced periods of financial difficulty due to extenuating circumstances”.

Dubbed the “Back To Work – Extenuating Circumstances Program”, the FHA removed the familiar waiting periods that typically followed a derogatory credit event.

If potential home buyers have experienced any of the following financial difficulties, they may be program-eligible:

  • Pre-foreclosure sales
  • Short sales
  • Deed-in-lieu
  • Foreclosure
  • Chapter 7 bankruptcy
  • Chapter 13 bankruptcy
  • Loan modification
  • Forbearance agreements

What are the minimum eligibility requirements of the FHA “Back To Work” program?

In order to qualify for the FHA Back To Work program, you must meet several minimum eligibility standards. The first is that you must have experienced an “economic event” (pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification, forbearance agreement, etc). The second is that you must demonstrate a full recovery from the event. Third, you must agree to complete housing counseling prior to closing. You must also show that your household income declined by 20% or more for a period of at least 6 months, which coincided with the above “economic event”.

The FHA realizes that sometimes credit events may be beyond the borrower’s control and that credit histories don’t always reflect a person’s true ability or willingness to pay on a mortgage.”

…of course in the past mortgages were approved everyday for people who could not pay them back but that is a separate issue maybe or something.

Does anyone ever truly recover from the loss of a home due to foreclosure?