FHA Back to Work program helps people buy sooner after short sale

by Huntington Beach Realtor – Scot Campbell – Previews Property Specialist – Coldwell Banker Previews International

HUD logoThe FHA back to work program is available for Huntington Beach homebuyers who had a bankruptcy, foreclosure, or short sale in the recent past.  There are folks who had financial issues beyond their control and it is the intent of this program to help these homebuyers (who have worked out their financial difficulties) get back into homeownership before prices and interest rates climb any further.

FHA Loans allow as little as 3.5% down with loan amounts upto $625,500.

These guidelines have changed the waiting periods required after the discharge of a bankruptcy, foreclosure or short sale. Under normal (previous) guidelines it is 2 years after a bankruptcy. 3 years after a foreclosure and a short sale unless it can be shown that there were extenuating circumstances for the short sale.

The guideline changes below effectively cut the waiting down to 12 months for each of these events.

The Special Credit Requirements / HUD Mortgagee Letter 2013-26 “Back to Work”:

This guidance applies to purchase transactions only.

The provisions of this mortgagee letter apply when a borrower experienced an Economic Event, as defined in the ML, which resulted in a foreclosure, short sale, bankruptcy or other negative impact on their credit, AND whose application has been issued a “Refer” recommendation by TOTAL Scorecard, or received an “Accept/Approve” but must be manually downgraded. All other FHA eligibility and policy requirements apply in addition to these requirements.

Borrowers that may be otherwise ineligible for an FHA mortgage due to the waiting period for bankruptcy, foreclosure, deed in lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for an FHA mortgage if the borrower can document that the delinquencies and/or indications of derogatory credit are the result of an Economic Event as described below has completed satisfactory Housing Counseling as described below, AND meets all other HUD requirements

Definitions: An Economic Event is any occurrence beyond the borrower’s control that results in a Loss of Employment, Loss of Income, or a combination of both, which causes a reduction to the borrower’s Household Income of 20% or more for a period of at least 6 months. The Onset of an Economic Event is the month of the Loss of Employment/Income. Recovery from an Economic Event is the re-establishment of Satisfactory Credit (as defined below) for a minimum of 12 months.

I know several FHA lenders who have done a good job for our clients in the past.  If you need a referral, please email me at Scot.Campbell@ColdwellBanker.com.


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For questions about buying and selling real estate in Huntington Beach and Coastal Orange County, contact Scot Campbell.

Scot CampbellHe is the President of The Scot Campbell TEAM at Coldwell Banker-Campbell Realtors in Huntington Beach, CA. 

Scot is a Previews Property Specialist,  has been a licensed for over 27 years, and has brokered over 1000 homes… including just about every type of transaction imaginable.

Read his profile and client reviews at www.ScotCampbell.com

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