@ShanetheMortgageMan wrote:
The guidelines for the Back to Work exception are very specific and it's very documentation heavy.
Needs to be proven that there was a loss of income of at least 20% for at least 6 months, due to the employer reducing wages or letting the employee go. Credit needs to be good (not perfect) prior to the economic event, and 12 months of re-established credit needs to happen after the mejor derogatory that the standard waiting period is trying to be reduced on. And you need to do the homeowner education course at least 30 days before applying. I've had numerous people come to me saying they meet the guidelines, only to find out early in the process that they quit their job, lost out on the ability to make overtime, no longer made bonuses, had their hours reduced or chose to work less hours, had a poor year of commissions due to the economy, was fired for employee misconduct, etc... and none of those meet the requirement. It needs to be "You are being let go" or "Your salary/hourly wage is being reduced". I've also had a lot of people miscalculate as well, not including the other spouse's income, measured the amount of time incorrectly, or not doing the math correctly. Have had some clients who got into hot water with missing payments, and then losing their job was just the final nail in the coffin. Even have had clients take an ineligible homeowner education course that doesn't meet the requirement. Documentation normally is every year of tax return & W-2 going back to the economic event, along with employment verifications or a final paystub from the employment when the economic event occurred. If unemployment compensation was rec'd (like it normally is) then that needs to be documented too. Lastly, a timeline of the events usually is needed as well (or is highly recommended).
People need to realize that the guideline of just waiting 1 year after a short sale, foreclosure, deed-in-lieu, or Ch 7 BK is not a new guideline... it's always been there for FHA if there is an extenuating circumstance. What is new about this is that losing 20% of income for at least a 6 month period is now considered an extenuating circumstance. I suspect it's because people have been trying to use that as an extenuating circumstance, and underwriters were hemming & hawing over if it is one or not... and enough underwriters bugged FHA about it so specific guidelines were put into effect.
The % of success primarily depends on how well a file is put together & the loan officers understanding of the program and ability to analyze the paperwork, with some (but less) significance on the lender who is doing the underwriting.
That said... I signed the petition. May not work, but it never hurts.
Thank you for your perspective. Through the feedback of 4 loan officers, plus my own loan denial - 4 times, I am also aware of just the opposite. Slam dunk cases, where everything was documented, all guidelines met, and for whatever reason, these applications have been deinied. They have been appealed, documented, and still denied. In my case, the UW replied to the presentation of documentation, "YOU CAN'T FORCE ME TO APPROVE THIS!" There is no forcing, there is only the presentation of documentation.
Once in the hands of underwriters and Mortgage company overlays, the tacts are - thousands are denied. Hundreds are approved.
