FHA - Back to Work
On August 15, 2013, the U.S. Department of Housing and Urban Development issued Mortgagee Letter 2013-26 which provides underwriting standards and criteria for evaluating borrowers who have experienced an Economic Event that resulted in a severe reduction in Household Income. Southwest Funding, LP and select partners will accept loans qualified under the provisions of Mortgagee Letter 2013-26 on our FHA Product Line.
Existing minimum credit score, debt ratio, LTV and reserve requirements per Southwest Funding's FHA Program will apply.
Borrowers that may be otherwise ineligible for an FHA-insured mortgage due to FHA’s waiting period for bankruptcies, foreclosures, deeds-in-lieu, and short sales, as well as delinquencies and/or indications of derogatory credit, including collections and judgments, may be eligible for an FHA-insured mortgage if the borrower
- can document that the delinquencies and/or indications of derogatory credit are the result of an Economic Event as defined in this ML,
- has completed satisfactory Housing Counseling, as described in this Mortgage Letter, and
- meets all other HUD requirements.
An Economic Event is any occurrence beyond the borrower’s control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrower’s Household Income of twenty (20) percent or more for a period of at least six (6) months.
The Onset of an Economic Event is the month of Loss of Employment/Income.
Recovery from an Economic Event is the re-establishment of Satisfactory Credit (as defined on page 5 of this ML) for a minimum of twelve (12) months.
The term borrower includes borrowers and co-borrower.
Borrower Household Income means the gross income of the borrower and all Household Members, as defined below, for purposes of assessing loss of income. The gross income of each Household Member must be computed in accordance with FHA income requirements.
Note: Household Member, for the purpose of this ML, means an individual residing at the borrower’s primary residence at the time of the Economic Event and who was a co-borrower on the borrower’s previous mortgage.
For more information go to www.branch777.com and contact us or just call 317-899-9935.
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