FHA’s Extenuating Circumstances Exception is the key for many Maryland renters looking to enter back into the world of homeownership within 12 months.
Baltimore, MD (PRWEB) September 27, 2013
Best Rate Home Loans(http://brhomeloans.com), a national network of mortgage professionals who are approved for the Federal Housing Administration’s FHA Mortgage Program, reported that the waiting period for many Maryland residents who have had to undergo such economic events resulting into a foreclosure, short sale, or bankruptcy may no longer have to wait for three years as initially required under FHA’s underwriting guidelines, and can buy again after 12 months.
With the new ‘Extenuating Circumstances Exception’ guideline now in effect, many former homeowners in Maryland who have experienced financial hardship and have the ability to show documented reasons as to why they lost their home, made the decision to short sell, or filed for bankruptcy must be able to show that they have made a satisfactory credit recovery for the past 12 months may now be eligible to enter back into the world of homeownership.
According to RealtyTrac ( the leading online marketplace for foreclosed properties and real estate data), report released as of September 2013 showed Maryland in its highest foreclosure period 12 months ago with 1,200 properties. It’s been a year now and Maryland is showing a great amount of increase with over 4,000 foreclosed properties, if any of these 4,000 properties have been taken into account 12 months ago the owners of these properties may now be able to buy again after having their property foreclosed due to the occurrence of economic events leading to a loss of income or loss of employment. If this is the number representing just the past year, we can only imagine what the numbers were 24 months ago.
Collected data retrieved from the U.S. Bankruptcy Courts ( as of June 30, 2013) (Administrative Office of the U.S. Courts) for the number of bankruptcies filed, Maryland alone had a total of 22,636 bankruptcies filed just within the last year with 17,727 under Chapter 7 and 4,869 under Chapter 13.
Based on The findings of the Bureau of Labor Statistics (as of August 2013), Maryland landed on number 26 with a rate of 7.0 for unemployment. Over the past year Maryland had a statistically significant change from 2,572,900 to 2,616,200 employed residents, which is a 43,300 increase from 2012. This change in the employment rate in Maryland may very well represent the amount of individuals who may just be getting back to work and back on their feet after losing their jobs, their homes, and may have been waiting to buy again.
Michael Meek, Branch Manager for Great Plains National Bank, an approved FHA lender in Maryland, says, “This is an excellent move by the government and HUD to help previous homeowners reclaim the American Dream that they lost within the past few years due to economic circumstances that were out of their control. We will be working hard with the FHA and other government insured programs such as USDA and VA to ensure we can roll these new guidelines out smoothly to make the greatest impact for Maryland renters who want to buy again after a short sale, bankruptcy or foreclosure.”
This is wonderful news for many renters in Maryland who have been waiting for such a rare change. However, in order to qualify for the back to work exception, these borrowers are required to show that experiencing financial hardship is not going to take place again.
The Satisfactory Credit surrounds specific documents and data collected prior to this exception being granted to them, such as:
-Clear of late housing and/or installment debt payments, and any major derogatory credit issues relative to revolving accounts.
-If there is a current open mortgage it must show twelve (12) months of satisfactory payment history.
-Any mortgage that has gone through loan modification either temporary or permanent must have all payments documented as received in accordance within the agreement in the modification.
-The borrower must meet all requirements listed in the Mortgagee Letter.
Additionally, as far as how the new home builders are paying attention to the economy, according to the U.S. Census Bureau and the Department of Housing and Urban Development new residential construction numbers (as of September 18, 2013) reported an increase of 91,000 new housing permits filed compared to August of 2012 and August 2013.
About The Federal Housing Administration Home Loan Program for Maryland:
The FHA Mortgage Program has been around since 1934 and has helped over 34 million people become homeowners by expanding the eligibility requirements and is a part of The Department Urban Housing Development (HUD), providing mortgage insurance on loans made by FHA-approved lenders. The FHA provides mortgage insurance for a person to purchase or refinance a primary residence that is being funded by the bank in case of defaults. The release of the new FHA Back to Work Program will help Boomerang Home Buyers become homeowners again.
Maryland FHA Back To Work Program Guidelines:
There are eligible economic events listed in the Extenuating Circumstance Guidelines, such as:
-Loss of Income
-Loss of Employment
There are two ways you must document the reason for loss of income, one of these should be acceptable under the required guidelines:
1.) Written verification of employment (VOE) with documentations of the date and the amount showing that the income has in fact dropped.
2.) Tax returns signed or W-2’s showing proof of loss income in the household.
The Extenuating Circumstances is if the loss resulted in at least a 20% drop in income or reduced income for 6 months.
For applicants with exceptional circumstances for loss of employment they must provide:
Written Verification of Employment (VOE) confirming the date of termination.
If the exception is due to loss of employment was actually due to the employer running out of business then there are a few extra requirements such as:
- Written notice of termination.
- Available public documentation of the business closing.
- Documentation of unemployment income.
Best Rate Home Loans is a nationwide online network of home loan professionals and lending institutions that are authorized to deal in the Federal Housing Administration’s Back to Work Program (FHA). To learn more from a FHA specialist, call toll-free at (888) 699-2365.