FHA’s “Back to Work” Program

There’s good news for home owners who lost their homes in the last 12 months due to foreclosure, short sale, deed-in-lieu or who declared bankruptcy. A new federal program called “Back to Work – Extenuating Circumstances” allows such homeowners to buy a primary home just 12 months later – giving them a second chance at homeownership.

To qualify, the buyer must:

• Meet FHA loan requirements
• Provide documentation showing financial hardship resulting in loss of at least 20% of income for 6 months or more
• Show current employment status
• Have re-established a responsible credit history - a 12 month record of on-time rental housing payments with no delinquencies
• Have a credit score of 640 or more
• Have completed HUD-approved housing counseling

The program runs through September 30, 2016. 

If the foreclosure, short sale, deed-in-lieu occurred 36 months previously, the buyer would be eligible for a new FHA loan without the above requirements, as long as the credit, income and assets are acceptable with the lender.

 

A Brief History of FHA

Congress created the Federal Housing Administration (FHA) in 1934 and in 1965, the FHA became a part of the Department of Housing and Urban Development's (HUD) Office of Housing. When the FHA was created, the housing industry was flat on its back - America was primarily a nation of renters. Only four in 10 households owned homes. Here are some key dates:

• During the 1940s, FHA programs helped finance military housing and homes for returning veterans and their families after the war.
• In the 1950s, 1960s and 1970s, the FHA helped to spark the production of millions of units of privately-owned apartments for elderly, handicapped and lower income Americans. When soaring inflation and energy costs threatened the survival of thousands of private apartment buildings in the 1970s, FHA's emergency financing kept cash-strapped properties afloat.
• In the 1980s, the FHA moved in to steady falling home prices and made it possible for potential homebuyers to get the financing they needed.

By 2001, the nation's homeownership rate had soared to an all time high of 68.1 percent as of the third quarter that year.

The FHA and HUD have insured over 34 million home mortgages and 47,205 multifamily project mortgages since 1934. FHA currently has 4.8 million insured single family mortgages and 13,000 insured multifamily projects in its portfolio. In the more than 60 years since the FHA was created, much has changed and Americans are now arguably the best housed people in the world. HUD has helped greatly with that success.