FHA Back to Work Loan Program Update.

[Anonymous]

I signed the petition and was very  happy to do so.  It's been such a dibilitating, frustrating and unfair process.  The "rules" are change for every lender/underwriter you deal with.  I am going to quote EZdriver:  

"Lenders are treating mortgage applicants under this program as scammers trying to pull one over on them while the banks that committed actual fraud are being allowed to buy their way out of prosecution. That shows our politicians care about business and not us. Programs like this allows clowns in Washington to claim they are helping us while they could care less about us. <off soapbox now>

I am pleased to have been approved for this exception despite the pain of what it took to comply with some ridiculous lender overlays. Just wished that more people could and should benefit from the program."  

I couldn't agree more!

[ShanetheMortgageMan]

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@neaky1 wrote:

Well, I don't know what "lots of people have been approved" means to you, but according to information obtained through the Freedom of Information  act:

as of July 1, 2014 only 200 Exemptions have been issued by FHA nationwide!  No more excuses, no more defending this program.  Only 200 exemptions have been approved in the first year of operating.  That is out of thousands of applications.

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I requested the same information.  On Feb. 12th HUD replied with information that 430 loans have been insured under Back to Work exception as of 11/30/14, or 5 months after your information.  That means the amount of loans more than doubled under Back to Work in the next half a year.  Not staggering numbers by any means, but clearly shows that lenders are making these types of loans.  The MBA Mortgage Application Index doesn't show much of a change in mortgage application activity levels (oddly spiked up just before Thanksgiving), and there wasn't any major investors who decided to start offering it since then... so I'd speculate that more people are finding out about the program and applying for it and/or underwriter's are becoming more familiar with the exception.  From what I've seen the amount of people applying for it has increased, whereas underwriting scrutiny has only become marginally less.

[neaky1]

400 in over a year?!  Hundreds of thousands need it and about 400 - NATIONWIDE - have been approved.  Millions of dollars spent on administration and just 400 approvals? Wow, how overwhelmingly underwhelming.

[Anonymous]

@ShanetheMortgageMan  -   I disagree to this below statement as per the Mortgage Letter (ML 26-13)  throughly, it doesn't not mention that the 20% of decrease in income should not be related to 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.  These conditions seems to be your underwriters and/or Lender conditions which may vary from lender to lender.  Where in the ML 26-13 does it states that reduction in Bonus and commission due to company doing budget reduction due to poor economy???? 

I am yet to apply for an FHA Back to work Program (awaiting for my 30days after home couns) and would like to know if I will be approved if my income loss was due to my previous employers budget reduction to eliminate the bonus plan and layoff employees- I, being one of the consistent top producers was given a choice to transfer myself to a different department atleast  to save my job but at a reduced rate with no bonus plan. For 9months I was collecting 25% less income until I found another opportunity at a better pay but until then it's was too late to save my house, it was already into foreclosure proceedings.

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.

[Anonymous]

You are dealing with a wrong Lender/Broker - find another one please, there are thousands lenders doing FHA Back to Work now.

[Anonymous]

Was your income reduced by 20% or more due to change in Bonus plan or commission struture due to poor economy?

just trying to find an example like mine to keep trying.

[neaky1]

At this point, it wont hurt trying - lots of paperwork, a month or two of submitting or resubmitting.  Underwriters seem to be the hold up - and lender overlays - lenders don't want to have to buy back the loan.  Good luck.  I finally got another loan @ 3.75% interest - my three years was up.  But with interest down and prices stable, now is the time to go for it.

[neaky1]

That's 208 in 8 months.  208 in 8 months?!!!!  Hundreds of thousands have need and 208 in 8 months?!  This is an embarrassment.

[neaky1]

i had a construction company.  I went from 3 million in sales to zero sales in 3 months.  I took another job whose salary was 60% less than what I made as a G.C.  My wife then lost her job and over the course of 1 year, our income dropped 50%.  The next year, it dropped 30% of the remaining 50%.  Over 3 years time, we lost 73% of our income.  But since we didn't liquidate our 401k to save our house FHA underwriter didn't approve our loan.  We tried with 4 different lenders and each underwriter found a different reason to deny the loan.  

We had documented answers to counter every reason for denial and their response, "I'm not going to be railroaded into approving the loan."  So, submitting factual data and questioning the grounds of denial is considered "Railfoading"!  Underwriters are people and don't like to be shown to be in error.  Again, give it your best shot.  Have all your documentation up front.  Document your documentation!  But understand, for reasons beyond your control - only 430 people in two years have actually been approved.

[neaky1]

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@Anonymous wrote:

@ShanetheMortgageMan  -   I, being one of the consistent top producers was given a choice to transfer myself to a different department atleast  to save my job but at a reduced rate with no bonus plan. For 9months I was collecting 25% less income until I found another opportunity at a better pay but until then it's was too late to save my house, it was already into foreclosure proceedings.

The problem here is you did regain your income and if the foreclosure had not taken place yet, FHA underwriters will ask, "why didn't you save your house?"  That is only a rehtorical question.  The expectation is, you use everything  in your bank, mattress, retirement account, etc - to save your house.  If you don't, you won't qualify.  At least that was my experience.

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