The Federal Housing Administration is allowing borrowers who went through a bankruptcy, foreclosure, deed-in-lieu, or short sale to reenter the market in as little as 12 months, according to a mortgage letter released Friday.
The Partnership’s Consumer Credit Counseling Services will offer a required eight hour pre-purchase class starting on Sept. 12 through Oct. 3, from 6-8 pm. Partnership’s CCCS program wants to make consumers aware of these changes, as a greater understanding of the FHA loan process increases the likelihood of the consumer being able to get approved for an FHA loan.
The new set of guidelines includes the following:
· Borrowers who experienced a foreclosure must wait at least three years before getting a chance to get approved for an FHA loan, but with the new guideline, certain borrowers who lost their home as a result of an economic hardship may be considered even earlier.
· Borrowers who went through recession-related financial event, FHA stated it realizes “their credit histories may not fully reflect their true ability or propensity to repay a mortgage.”
· In order to be eligible for the more lenient approval process, provided documents must show “certain credit impairments” were from loss of employment or loss of income that was beyond their control. The lender also needs to verify the income loss was at least 20 percent for a period lasting for at least six months.
· According to the letter, recovery from an economic event involves reestablishing “satisfactory credit” for at least 12 months. Criteria for satisfactory credit include 12 months of good payment history on payments such as a mortgage, rent, or credit account.
· Borrowers must demonstrate they have fully recovered from the event that caused the hardship and complete housing counseling.
· The new guidance is for case numbers assigned on or after Aug. 15, and is effective through Sept. 30.
For help or to learn more contact a trained and certified counselor at Partnership’s Consumer Credit Counseling Service at 423 490-5620 or 800-459-2227 or www.CreditHelpToday.org.