FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that:
- 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; and,
- the borrower has completed housing counseling.
Definitions: 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.
Please read the FHA Back to Work – Extenuating Circumstances Mortgagee Letter 2013-26 dated August 15, 2013 for all criteria that allows exception for a new FHA mortgage as soon as one year after a short sale, foreclosure or bankruptcy, within the three year required wait period of FHA.