October 28, 2013
Ever since we posted about the FHA’s Back to Work program for borrowers who have experienced “Economic Events” or financial hardship and lowered credit ratings as a result of the recession, we’ve gotten a number of important questions about the program.
According to one of our original posts on the new FHA program, “Back To Work, according to FHA Mortgagee Letter 2013-26, lets lenders evaluate these Economic Events to see if the borrower may still be a good credit risk for an FHA loan. “FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage. To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:
- certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control;
- the borrower has demonstrated full recovery from the event; and,
- the borrower has completed housing counseling.”
But many borrowers aren’t sure where to look for the required counseling. According to the FHA official site it can’t be just ANY counseling session, it must meet certain requirements.
“To qualify for purposes of establishing Satisfactory Credit following an Economic Event, participants in this FHA initiative must:
• receive homeownership counseling or a combination of homeownership education and counseling provided that each participant receives, at a minimum, one hour of one-on-one counseling from HUD-approved housing counseling agencies, as defined at 24 C.F.R. 214.100. The counseling must address the cause of the economic event and the actions taken to overcome the economic event and reduce the likelihood of reoccurrence. The housing education may be provided by HUD-approved housing counseling agencies, state housing finance agencies, approved intermediaries or their sub-grantees, or through an on-line course, and
• be completed a minimum of thirty (30) days but no more than six (6) months prior to submitting a loan application to a lender, as application is defined in Regulation X, implementing the Real Estate Settlement Procedures Act, 24 C.F.R. 3500.2(b).”
FHA rules say this counseling “may be conducted in person, via telephone, via internet, or other methods approved by HUD, and mutually agreed upon by the borrower and housing counseling agency, as provided for in the regulations at 24 CFR 214.300 and in the Housing Counseling Handbook.”
Where can you find this counseling? Via the FHA. You can find a list of FHA/HUID-approved housing counseling agencies at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or by calling 1-800-569-4287.
Do you have questions about FHA home loans? Ask us in the comments section. You can apply for get pre-qualified for an FHA loan or refinance loan at www.FHA.com, which is a private company and not a government agency.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
Browse by Date: