Looking for homes in Arlington, but have credit issues!

FHA Back to Work – Extenuating Circumstances Program: Q&A

We often have buyers looking for homes in Arlington, but have had credit issues due to the economic downfall from recent years. So we posed this scenario  to Michelle Schmidt at Cobalt Mortgage. She passed on this article, which we decided to pass onto our viewers.

If you experienced a credit impairment due to an economic Event, your Ability to purchase a home may be closer than you think.slider2

Q: What is the goal or purpose of this Program?

A: This is for potential homebuyers who have experienced financial hardship as a result of unemployment or a severe reduction in income due to the economic recession, but who have since re-established satisfactory credit. The FHA is waiving their three-year waiting period to give borrowers a “second chance.”

Q: Who is eligible for the program?

A: First – time and repeat homebuyers who are purchasing a home and have completed a HUD – approved home ownership counseling course and can document that the negative credit event was a result of the recession.

Q: What types of “credit impairments” may allow me to qualify?

A: The FHA defines a credit impairment as a pre – Foreclosure sale, short sale, deed –in – lieu, foreclosure, Chapter 7 or 13 bankruptcy, loan modifications or a forbearance agreement.

Q: What qualifies as an “economic event”?

A: A recession-enabled occurrence beyond the borrower’s household income (minimum 20 percent) for six months or more.

Q: What is the window for taking advantage of the program?

A: The program is effective for loans originated between August 15, 2013 and September 30, 2016.

Q: What actions define “recovery from an economic event”?

A: The FHA will conduct a review to determine if the borrower: 1) had satisfactory credit prior to the economic event; 2) experienced their negative credit event as a result of the economic event, and 3) has re-established satisfactory credit for a minimum of 12 months.

FHA conforming loan limits and other conditions apply; contact Michelle Schmidt for more details.

Michelle Schmidt, Cobalt Mortgage Inc., NMLS 35653

(425) 422-3214

NMLS 136234

Michelle Schmidtequal housing logo