FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.
Many borrowers experienced periods of recession related financial difficulty and/or credit impairment resulting from unemployment or a severe reduction in income. FHA recognizes the hardships faced by these borrowers, and that their credit histories may not fully reflect their true ability or propensity to repay a mortgage.
For Purchase transactions with case numbers assigned on or after August 15, 2013 through September 30,2016: FHA will allow consideration of borrowers who have experienced an Economic Event and can document that certain negative credit ratings resulted from loss of employment or significant loss of Household Income beyond the borrower’s control; and the borrower has demonstrated full recovery from the event and completed housing counseling.
Housing counseling helps borrowers
• understand loan options and obligations,
• prepare and evaluate the household budget,
• access reliable information and resources,
• avoid scams, and
• prepare for any future financial changes
To see all FHA Mortgagee Letters visit: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee