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FHA Back to Work

Good news from the Minnesota Homeownership Center today:

Recently, the Federal Housing Administration relaxed its guidelines for borrowers who “experienced periods of financial difficulty due to extenuating circumstances”.  Basically, this is the Federal Housing Authorities ‘second chance’ mortgage program for potential buyers who experienced financial hardship (unemployment or severe reduction in income) during the recent recession.

Known as the “Back To Work – Extenuating Circumstances Program”, or simply the “FHA Back to Work Program,” borrowers with a recent history of bankruptcy (Ch.7 or Ch. 13), foreclosure, judgment, short sale, loan modification or Deed-in-Lieu of Foreclosure can apply for an FHA-insured mortgage and may be able to become a homeowner again much more quickly than ever before.

• Buyers no longer need to wait three years to apply for an FHA loan after experiencing a foreclosure, short sale or deed-in-lieu.

• In addition, they no longer need to wait two years to apply for an FHA loan after experiencing a Chapter 7 or Chapter 13 bankruptcy.

• Buyers must be able to demonstrate that they have completely recovered from the financial event and if they have, the wait time is reduced to just 12 months

Potential borrowers are required to meet with a HUD-Approved Housing Counselor at least 30 days prior to submitting the loan application.  The Minnesota Homeownership Center maintains an easy-to-use search engine that helps you/your clients find their closest counselor.

Visit http://www.hocmn.org/buyingahome/housing-counseling/ to search for a counselor.

For more information on the FHA Back to Work – Extenuating Circumstances program, see Mortgagee Letter 2013-26:


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This website is a service of Aaron Dickinson of Edina Realty, a broker Participant of the Regional Multiple Listing Service of Minnesota, Inc.