In a recent article , the Salt Lake Tribune reported what we just went through was the worst housing crisis in Utah since the 1930’s. Starting in 2008 76.2% of homes in Utah were owned and in 4 short years, it hit the lowest rate of 71.1% -- the lowest since 1994. 91,000 jobs just disappeared between December 2007 and 2010.
The Trib related James Wood, director of the University of Utah’s Bureau of Economic and Business Research said, "‘What we went through was so unique. This is a reflection of what happened in the housing market and the connection between jobs, income and homeownership.’
"Wood estimated 50,000 to 60,000 households in Utah went from owning a home to renting.” With many homeowners actually renting out their homes instead of losing them to foreclosure; however, that did not stop the huge amount of foreclosures that happened in Utah.
This recent housing crisis really hurt many #SaltLakeCityhomeowners as well as those homeowners in the surrounding areas. When homeowners lose their homes to foreclosure, short sale, or deed –in-lieu of foreclosure, it generally means a LONG time before even thinking about buying again and is a huge black mark on your credit.
FHA has started a new program called #BacktoWork which was developed to help those who lost their homes to and Economic Event and doesn’t actually show a true picture of what type of borrower you are.
In the FHA news release August 15th, “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively affected. 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’s control;
- the borrower has demonstrated full recovery from the event; and,
- the borrower has completed housing counseling.”
One of the above main requirements is the house counseling. “To qualify for purposes of establishing Satisfactory Credit following an Economic Event, participants in this FHA initiative must:
- receive homeownership counseling or a combination of homeownership education and counseling provided that each participant receives, at a minimum, one hour of one-on-one counseling from HUD-approved housing counseling agencies, as defined at 24 C.F.R. §214.100. The counseling must address the cause of the economic event and the actions taken to overcome the economic event and reduce the likelihood of reoccurrence. The housing education may be provided by HUD-approved housing counseling agencies, state housing finance agencies, approved intermediaries or their sub-grantees, or through an on-line course, and
- be completed a minimum of thirty (30) days but no more than six (6) months prior to submitting a loan application to a lender”
#Housecounseling not only helps first-time home buyers, but it is a great “refresher” course for borrowers know what loan options are available to them. “Housing counseling enables borrowers to better understand their loan options and obligations, and assists borrowers in the creation and assessment of their household budget, accessing reliable information and resources, avoiding scams, and being better prepared for future financial shocks, among other benefits to the borrower.”
These FHA loans are the usual FHA insured loan, but instead of waiting 3 years to become eligible for financing after a foreclosure, short sale or deed-in-lieu, it’s 12 months! You will just have to document any delinquencies and/or derogatory credit history to your lender before your loan is approved. Then all this will need to be reviewed and approved by HUD. Talk to your lender before diving into all the documentation – your Lender will spell out exactly what is needed for documentation.
But the good news is that you don’t have to wait 3 years before even thinking about trying again for a loan!
The Back to Work program started August 15th, 2013, and runs through September 30, 2016.
If you’re not sure where to turn, contact us today. Our Lenders can help you with an FHA insured loan and we can actually get started on your new home search right away.
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