Late last week, H.U.D. unveiled a new set of guidelines under the FHA loan program for borrowers adversely impacted by economic downturn of the last five years.
The "Back To Work" program is geared towards borrowers who can substantiate that, their inability to make their mortgage payments, (that ultimately led to foreclosure or pre-foreclosure sale, deed-in-lieu, etc.) , was caused by an economic event, may now be eligible after 12 months for an FHA loan.
For the purposes of this program, an "Economic Event" is defined as "any occurrence beyond the borrower’s control that results in loss of employment, loss of income, or a combination of both, which causes a reduction in the borrower’s household income of twenty (20) percent or more for a period of at least six (6) months.
There are numerous guides for the borrower to be eligible for this program, but it strikes me as odd that FHA (back by our government) is willing to make signifigant changed in the guidelines, which no doubt is a lowering of credit risk, while at the same time talking about winding down Fanne Mae and Freddie Mac? FHA is not a money maker, while Fannie and Freddie have been paying back their loans so quickly, that one could argue that over the next year, all of the loans will be paid back and the government could make a profit off the relationship! Anyone have an opinion on this?
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