The Federal Housing Administration is continuing to extend better service to mortgagees by re-evaluating the guidelines it uses to approve loans, particularly loans applied for by people whose income and credit where affected by the recession.
Many homeowners experienced unemployment or pay-cuts as a direct result of the recession, causing them to fall behind on their mortgages and ultimately lose their homes to foreclosure or short sale. The FHA recognized these record numbers are an indication of deep financial trouble caused by wide economic instability, and in most cases, do not truly reflect an individual borrower’s ability or intention to repay a mortgage.
In pre-recession times, it was nearly impossible for someone with a foreclosure on their credit to be approved for a loan so soon after losing their home. But in an effort to narrow the focus on these homeowners who have experienced the unfortunate effects of the recession, the FHA is allowing for the consideration of borrowers who have been affected by a significant “Economic Event” and who can document that certain credit impairments were a result of loss of employment or significant loss of household income beyond control, who’ve shown full recovery from the economic event and who have completed housing counseling.
Housing counseling is a significant resource for home buyers with any level of experience in the market. Whether a first-time home buyer or a repeat, housing counseling helps borrowers to better understand their loan options and obligations, assists them in creating and evaluating their household budget, provides access to reliable information and resources, and helps prepare them for the possibility of future financial upsets.
If you’ve lost your home as a result of the recession, don’t give up the hope of becoming a homeowner again. You’re not alone! The FHA has recognized the need to consider the individual histories of each borrower, because if every homeowner affected by short sale or foreclosure were to be continuously denied another mortgage, there would be no hope of economic recovery.
For more information, or for recommendations for where to turn to explore your options, give Joe a call!