Residents of Southern Nevada, who lost their property due to financial hardship during the recession, now have an opportunity to be home owners again. The Federal Housing Administration’s new "Back to Work-Extenuating Circumstances" program can expedite this process, allowing it to happen sooner rather than later. For those who qualify, FHA has shortened the waiting period for borrowers with a foreclosure, bankruptcy, deed in lieu of foreclosure or short sale on their record. Potential buyers, who meet the requirements set forth by the FHA, may be able to purchase a home again within a year. This waives the FHA's previous three-year waiting period.
In order to qualify, buyers must:
Meet the home loan requirements established by the FHA
Be able to document their financial hardships and subsequent credit issues
Show a re-established history of credit over the last year
Complete HUD-approved financial counseling
The first step in the process establishes if the potential buyer meets the general FHA loan requirements. It’s important to note that just like any other FHA loan, participants in the Las Vegas area are required to put down 3.5%, while providing documentation that proves their ability to pay. In other words, they must still adhere to the strict lending standards established by the Federal Housing Administration.
Secondly they must explain how their financial hardship was beyond their control. A life event that caused them to lose a job or cut their income by more than 20%, may qualify them for this program. A candidate must also demonstrate at least one year of timely rental payments with no delinquencies. If there are any open collection or judgment accounts, then an analysis will be performed to assess repayment options.
Those interested are required to take a “Pre-Purchase Counseling” course with a HUD approved counseling agency within 30 days of starting their application. During this process, a certified counselor will scrutinize the borrower’s debt level, the ability to afford a home and various aspects of the mortgage. In addition they will review the loan application process and mortgage insurance with the buyer. Springboard Nonprofit Consumer Credit Management is approved by HUD to counsel borrowers and help them through this program. After completing a session, the Pre-Purchase Counseling certificate if good for 6 months.
I believe counseling is imperative for people re-entering the market as well as first time home buyers. This engages people and helps them better understand their loan options, household budgets and obligations prior to the purchase. Something I strongly advocate.
With millions of people impacted by the recession, the "Back To Work" program may have a significant impact on our real estate markets both nationally and here in Las Vegas. I certainly believe in second chances, especially when they can strengthen markets as well as families.