What is Back to Work?

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

The guidance in Mortgagee Letter 2013-26 may be applied for borrowers that experienced extenuating circumstances related to an Economic Event as described in Mortgagee Letter 2013-26; and received a REFER recommendation from TOTAL; or an Accept/Approve but are manually downgraded.

An Economic Event is any occurrence beyond the borrower's control that results in:
A 20 percent or more reduction in a borrower’s Household Income for a minimum period of six months resulting from a Loss of Employment, Income or a combination of both. An Economic Event includes the following definitions:
• Onset of an Economic Event: The month of loss of employment/income.
• Recovery from an Economic Event: The re-establishment of satisfactory credit for a minimum of 12 months.

To see all FHA Mortgagee Letters visit:


ML 2013-26



All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.