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How to obtain a Mortgage shortly after filing for Bankruptcy or Foreclosure

By Edward Hannah

February 13, 2015

If you have faced financial hardship that has caused your previous home to end in foreclosure or you have had to recently file Chapter 13 or Chapter 7 Bankruptcy, you may qualify for a home loan in as little as 12 months under the FHA's "Back to Work" program.

The normal waiting period for a foreclosure is 3 years and it's 2 years for a bankruptcy. FHA's Back to Work program reduces this time to 12 months. According to the Federal Housing Administration, they have relaxed their guidelines for borrowers who "experienced periods of financial difficulty due to extenuating circumstances."

You may be eligible for the Back to Work program if you have experienced one of these events:
  • Pre-foreclosure sales
  • Short sales
  • Deed-in-lieu
  • Foreclosure
  • Chapter 7 bankruptcy
  • Chapter 13 bankruptcy
  • Loan modification
  • Forbearance agreements

To qualify for a mortgage under this program, you must meet the following requirements:
  • Experienced an Event above
  • Show that your household income declined by 20% or more for a period of at least 6 months, which coincided with an above event
  • Show that you have recovered from that event by paying your bills on time
  • You must agree to complete housing counseling prior to closing

For more information on the FHA Back to Work program and to see if you qualify, please contact your mortgage broker. If you do not have one then let us know and we can refer you to one.

I hope this information I have provided will help someone redeem their piece of the American Dream.

Edward Hannah