How To Get A Mortgage 12 Months After A Foreclosure Or Bankruptcy…

We are one of the few lenders that uses FHA’s Back To Work program. …If you can prove you had a significant “economic event” in your life that resulted in loss of income.

Here is how FHA describes an “economic event”:

An 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 percent or more for a period of at least six months. The Onset of an Economic Event is the month of Loss of Employment/Income. Recovery from an Economic Event is the re-establishment of Satisfactory Credit for a minimum of twelve months.

In order to use this program we have to prove a few things…

1) Certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower’s control.
2) The borrower has demonstrated full recovery from the event. (good credit history since)
3) The borrower has completed housing counseling. (I can show you how to do this)

Here is what FHA wants to see on your credit since your recovery from your Economic Event…

1) No history of delinquency on rental housing payments.
2) No more than one thirty (30) days delinquency on payments due to other creditors
3) No collection accounts/court records reporting (other than medical and/or identity theft).

 

Here is what FHA wants to see to prove loss of employment that caused the Economic Event…

1) A written Verification of Employment (we get this) evidencing the termination date or in cases where the prior employer is no longer in business.
2) A written termination notice.
3) Other publicly available documentation of the business closure (if applies and is available).
4) Documentation of receipt of unemployment income.

Other than this FHA will want us to prove that 12 months have elapsed since the Foreclosure or Bankruptcy.

If you are in this situation, or you know of someone in this situation – don’t fret! There is hope for you!

Give me a call or shoot me an email and I’ll be happy to see if we can help you out!

That’s it for today!

Have a good day today! …and thanks for reading.

Brett

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