The FHA has a new program called Back To Work, designed to help borrowers who have experienced what the FHA terms an Economic Event that resulted in negative credit information but may not necessarily be an accurate indicator of a borrower’s creditworthiness or ability to repay the FHA mortgage.
Back To Work, according to FHA Mortgagee Letter 2013-26, lets lenders evaluate these Economic Events to see if the borrower may still be a good credit risk for an FHA loan. “FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage. To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:
- certain credit impairments were the result of a Loss of Employment or a significant loss of Household Income beyond the borrower
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