More “Help” For The Market?

By: Mark Wisterman

My 2013 Photo-Web-Revised


The number of buyers who are searching for their next home in the Lake Oroville real estate market is about to increase putting further pressure on home prices thanks to FHA.

Under this new program, which runs until September 30, 2016, someone who has lost their home due to an “Economic Event” or has filed for Chapter 7 or Chapter 13 bankruptcy due to an “Economic Event” can qualify for the purchase of a home with an FHA loan in as little as 12 months after the loss of their home or discharge of their bankruptcy.

What is considered an “Economic Event” under the FHA guidelines? According to Mortgagee Letter 2013-26 it is defined this way:

An “Economic Event” is any occurrence beyond the borrowers control that results in Loss of Employment, Loss of Income, or a combination of both, which causes a reduction in the borrowers Household Income of twenty (20) percent or more of a period of at least six (6) months.’

Now before you get too excited, you also need to know that there are some pretty strict requirements for proving the Economic Event. FHA is not going to just take your word for it. For example, to substantiate your loss of income the guidelines require that:

The lender must verify and document the Borrower’s Household Income prior to the Loss of Income by obtaining:

2009 Budget Summary.indd

  • a written VOE (Verification of Employment) evidencing prior income; or
  • signed tax returns or W-2’s evidencing prior income.

In addition, there are credit guidelines that, among other things, require that the “buyer has re-established  Satisfactory Credit for a minimum  of 12 months.”

Borrowers are also required to obtain “pre-purchase housing counseling…..” before being able  to obtain a loan under this program.

If you think you may be a candidate for this program you need to talk to a reputable lender who can patiently guide you through the process as there can be NO shortcuts taken with this program. EVERYTHING will have be to documented in order for you to qualify for this. So please be prepared for quite a bit of jumping through hoops to get this done.

I would be happy to refer you to a lender who can assist you with this if you would like. E-mail or message me from my Facebook page.

Will this really help the Oroville real estate market. Nope! It may actually hurt the market by adding more eligible buyers to a market where there is already a shortage of available homes for sale.  What this market needs is more sellers to help balance supply and demand.