FHA Back to Work Loan- Credit approval

It has been a while since I posted my first posting on the FHA Back to Work program and so far I have 3 clients I am currently working with on FHA Back to Work credit approvals. What I am finding is that  most of the buyers I talk to are suspect that they can actually get approved for this program and don't want to get their hopes up. Here is the first correspondence from a buyer searching for a lender through the internet

Client

Hi Ted,

Thanks for your email and voicemail. We are still looking but really aren't sure what our options are since we had a short sale on our first home about 4 years ago and a foreclosure on a mountain home about 2.5 years ago. I lost my job in the Bay Area and had to downsize. We never have been late on any other bills and have been employed but at a lower rate than what I made as a Corporate Marketing Manager in Sunnyvale. With all that said, would we even qualify at this point or do we need to wait until we hit the 3 year mark on the foreclosure?

Ted

If  the reason for foreclosure was due to job loss and you can document a decrease in income by 20% at the time you have a chance to buy now.   

Client

It was and it was much more than 20%. What kind of loan, how much down and what kind of rates? I don't want to go through an entire process to find out we need to wait until next summer. I'd like you to be up front with us about everything and if we have to wait we would still use you when we qualify. We are really busy and I don't want to waste our time or yours. How would we proceed?

What I do at this point is ask for the documentation from the client and analyze it to see if they will have a chance at approval. With a typical client looking to use FHA financing I could then run the automated underwriting software which will tell me if the client is approved or not. On the FHA Back to Work program the file has to be manually underwritten by an underwriter in our bank. So it's not up the loan officer to pre-approve you or even approve you at this point. You need the underwriter to do this and I'm finding the underwriters are being very tough on these FHA Back to Work loans. For this client I could see I had a strong file but I wanted to submit to the bank for a credit approval first so the borrower could have confidence that when she was putting out offers she would not get rejected for the loan and get her hopes dashed. I understand its a big emotional decision as well as a big financial situation. I recieved the credit approval from my bank a week after submission and now the buyer is making offers on properties in her target market. All she needs now to close the loan is a purchase contract and an appraisal! If you would like to get credit approved for the FHA Back to Work program please give me a call. There is no fee for this service!