Fha Back To Work – Buy A Home 1 Year After Foreclosure!

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member

FHA has opened the Back to Work program which began 8/15/2013 and has a new set of guidelines for borrowers looking to purchase a home. Typically FHA requires a 3 year waiting period to obtain financing when a borrower has experienced an economic issue in the past such as a short sale or foreclosure. Those guidelines have now changed to allow financing to borrowers 12 months after the economic event occurred. We will be talking about the underwriting criteria that’s involved with approving these loans throughout this post. You’re more than welcome to ask me any questions that pertain to this program as well.

FHA recognizes the hardships borrowers have faced and realizes that their credit history may not fully reflect their true ability to repay a mortgage. Many homeowners experienced unemployment or other severe reductions in income were unable to make their monthly mortgage payments and ultimately lost their homes to foreclosure or short sale. With that being said FHA is allowing for the consideration of borrowers who have experienced an economic event and can document:
  • 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.
  • The borrower has completed housing counseling
How to get Free Housing Counseling for the FHA Back to Work program? Get pre-approved through us and I will be more than happy to provide you their contact information. Typically companies have been charging around 100-200 and I’ve found one who will do it in certain states for free.

Satisfactory Credit Requirements:
  • Credit must be clear of late housing or installment debt payments and major derogatory credit issues on revolving accounts.
  • Any open mortgage must be current and show 12 months satisfactory payment history. Mortgages that have been brought current through loan modification, which may be “temporary” or “permanent” so long as all payments have been documented as being received in accordance with the modification agreement.
  • No history of delinquency on rental housing payments
  • No more than one 30 day delinquency on payments due to other creditors
  • No collection accounts/court records reporting (other than medical and/or identity theft)

Income Reduction Requirements:
We must verify and document a reduction in the borrower’s household income of twenty (20) percent or more for a period of at least six (6) months that resulted from the Loss of Employment, Loss of Income, or a combination of both.

In some cases the borrower started missing payments up to 2-3 years prior to when their property actually foreclosed. This is not uncommon at all and requires that we document the loss of income when the payments started being missed because that is essentially when the problems arose. If we cannot document this it will look like the homeowner took advantage of the declining market and would not be eligible for the program.

Loss of Employment:
  • We must document the loss of employment by obtaining a written Verification of Employment (VOE) evidencing the termination date or in cases where the employer is no longer in business:
  • A written termination notice
  • Other publicly available documentation of the business closure and
  • Documentation of receipt of unemployment income
If the borrower resigned from their work which caused the decline of income they are not qualified for this program. The loss of income must come from being terminated in order to be eligible.

All in all this is a fantastic program for homeowners that have experienced an economic event that was out of their control. Recently I have had much success in the program due to the borrowers due diligence up front with providing the documentation we need to fund the new loan.
Feel free to contact myself on the information below for a no cost evaluation to see if you would fit the criteria. If everything looks good I’ll request the items I need to get you pre-approved.
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LoanSafe Member
What can I say? We started working on the back-to-work program in December, and completed housing counseling, 12/14/13. We had some credit issues from an incorrectly-reported, fully paid student loan that had to be handled, and then applied in March. While it's been a long road, I wish my escrow was as easy as the mortgage process.

My wife insisted that we shop for our mortgage locally. We saw a local lender who had excellent references who was willing to take a shot at our back-to-work loan. He had never done one. We went through the entire process and just didn't leave with the warm and fuzzy feelings I would have liked to. He took us through a whole lot of unneccessary exercises that delayed our home shopping process. In the meantime, I came BACK to Loansafe.org to see if anyone had experimented with the Back to Work Program.

Erik stepped right up and was straightforward. At first, I was not keen on not being able to sit down at a table with my lender, but Erik and his team made us feel very comfortable with the entire process. While pursuing dual paths with both lenders, it was clear, especially when my local lender told us he'd have to broker the loan, that I was not willing to continue pursuing that and called Erik back and sprung into action.

Things that took 45 days to solve with my other lender were done overnight. I scanned all of my documentation to a dropbox account, sent Erik the link and within minutes he was working on our loan application. We had just had our offer accepted, so time was of the essence.

While this program is dependent on a very specific set of guidelines, if there is a way to make your loan work, the team at New American will do it. We had a unique situation with two income losses during this time, and I didn't even catch the first one, which was actually the qualifying event. You know who did? Erik and his underwriting team. They did not give up, even after we had resigned ourselves to be renters for another couple years.

Four weeks ago, I was about to get on a plane to fly home for the weekend and I received a text message from Erik. "APPROVED!" is all it said. I had never been so happy in my life.

Erik and his team are top-notch people who work tirelessly to make these loans happen. I am approved and expecting to fund any day now, as soon as a few house-related conditions are satisfied.

Everything else is satisfied, including us as borrowers!

Keep in mind, New American is a DIRECT LENDER. They write the loans in-house, not broker them out to the lowest common denominator. The reason I went with them in the end is they were willing to work hard to write our loan. I personally feel that a broker is no more than a salesman. Bring the loan in, get paid, move on. There's no incentive there.

Bottom line is: If it can be done, Erik and his team will do it. And unlike buying a car with challenged credit, you will still get a great interest rate and a good, solid loan that's fair and reasonable.

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Thank you Brad for the kind words, you have been an absolutely amazing client. Whenever I need ANYTHING you're right there responding 5 minutes later with the documentation that's required. I couldn't ask for anything more, without your efforts in providing us with what we need this wouldn't be possible.
I am self employed with a credit score 740. I have have been renting for four years and have never been behind. Rent is always prepaid in advance. I am sick of paying the high rents, but can't get a loan as I am self employed and do not show 1040 income. I am sick of this government and their BS and am looking at suing HUD for discrimination. I lost my home under the HAMP SCAM this government produced. Now I am denied a home and I am really upset about this.


LoanSafe Member
Hi Eric,

Ch7 Discharged Dec. 2009. We've been renting for 4.5 yrs with no lates. We never had any lates on our original mortgage until we were advise to, to enable the Chapter 7 to start. I have no late payments or have ever had any late payments except for the 3 months beginning our Ch7. Now 4.5 years later, I am ready to buy a house. I have had money seasoned in the bank for 4 years, no car payment, same job for almost 6 years. I really could use some good advise and someone to believe in my credit worthiness again.

Thank you


LoanSafe Member
Eric, it's a great service you're providing and it's good to know that there are people out there tending to the details and turning hope into realities for qualified buyers. I've heard too many horror stories of people not being able to buy, even though it seems they have done everything right!

With the ups and downs in the economy over these last years, it is not surprising that many otherwise qualified people had catastrophic interruptions in income. I was talking to a lady in a fairly small town and she told me that in 2008, all three of the town's major employers closed their doors at the same time. The whole town was in distress.

Thanks for a great post.

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Thanks Mark! I'm always here to help make sure future or current borrowers know exactly what it takes to fit into certain programs. When people like yourself recognize that it literally makes my day! Thank you and Happy New Year!


LoanSafe Member
do you know what documents are needed to get approved for this. We file ch 7 Bk after being partially laid off in 2009. i found docs from the irs with all my tax info, unemployment claims and the lack of income compared to now. also wrote a statement for the reason behind the BK, including marriage separation, the status of my job at the time, the layoff and what has been done to fix it. The loan officer has all current employment verification, including a much larger increase in income, long standing employment and nothing but improvement on credit since the Bk....will this be enough???

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
This program has officially ended.

If you unfortunately missed the opportunity to qualify for this loan we do still have low down payment portfolio options available. Please feel free to reach out to me anytime at Erik@LoansReduced.com with any questions.