Approved by FHA AUS then denied!!

[Anonymous]

Hi, I was hoping someone could help me understand this. I was recently approved for a FHA loan through the automatic underwriting system with my itd at 43.6% $10,000 combined in my savings and checking a gross monthly income at $3105 and a credit score of 620. After my file got to the underwriter my income did not add up to the original $3105 so my application was sent back to the lender. Everything was reconfigured and entered as followed income $2984 itd 41.5% $13,000 in savings and checking but this time the lender can not get the underwrite system to approve my loan!!! Any idea what could be causing this?!?

[StartingOver10]

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@Anonymous wrote:
Hi, I was hoping someone could help me understand this. I was recently approved for a FHA loan through the automatic underwriting system with my itd at 43.6% $10,000 combined in my savings and checking a gross monthly income at $3105 and a credit score of 620. After my file got to the underwriter my income did not add up to the original $3105 so my application was sent back to the lender. Everything was reconfigured and entered as followed income $2984 itd 41.5% $13,000 in savings and checking but this time the lender can not get the underwrite system to approve my loan!!! Any idea what could be causing this?!?

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^^^ I think there is an error in your post.  You used "itd" which I have not seen in mortgages.  Looks like that could be translated as "income to debt" and that is not how the ratios are calculated.  The ratios are calculated as DTI which is Debt to Income. This would make a material difference. If your income is 41.5% of your debt then it would not be approved. 

However, if your total debt ratio is 41.5% of your gross income, you are well within FHA guidelines. It is possible that either the lender has very strict overlays or something else in your file is causing the denial. 

It could be a simple error like a transposition of the numbers on either your debt or income; it could be something from one of the many verifications that are run on every file that came back differently from the application.  

Who is your lender?  Sometimes you can just go to a different lender and get a different result. 

[onstar]

Since the original figures were AUS approved, I'm going to assume that "itd" is actually DTI. Given that:

The AUS is very picky. You need to have everything just right so that it will be approved. If certain boxes are left checked/unchecked or if the wrong item is chosen in a dropdown box, then that one item could cause the response to be ineligible. For example, there is a dropdown for the FHA program, and if you choose 203(k) when you meant 203(b), then the AUS will come back Ineligible as they are totally different programs. Or something like what StartingOver10 mentioned like transposing 1 digit (entering $100.00 when you meant $1000.00) which could throw off one of the ratios. There are dozens of places where someone could have made a small mistake. Assuming there is nothing else that changed other than what you told us, there is no reason for the AUS to come back with something other than Approve/Eligible.

BTW, did the AUS come back as Refer/Eligible or did it come back as Ineligible?

Again, you can take StartingOver10's advice and go with a different lender. 

[Anonymous]

Yes i did mean DTI. lol It did come back as a refer/eligible but the lender does not do manual underwriting.

If the lender ran my application too many times would this flag my social or name causing it to not approve?

Could it be caused becaused the first application was approved and still has a case number tied to it?

[Anonymous]

I think its too late to go to a different lender now, at least to get the house im trying to get. The contract for it is up Aug. 31st.

[StartingOver10]

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@Anonymous wrote:

I think its too late to go to a different lender now, at least to get the house im trying to get. The contract for it is up Aug. 31st.

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Take it to another lender - find out first if they can do a manual underwrite. Explain exactly what happened and their timeline. Then get an extension on your contract. All of this presupposes you want to close on the property.  Extensions happen and the sooner you get one, the better off the seller will be too. More notice is better than less notice. Talk with your Realtor to see if they have another lender that does have manual underwriting.

[Anonymous]

Will my appraisal and the title information transfer or will a new lender have to start over from the beginning of the process?

[Anonymous]

We had to have a rescue from our first lender during our first homebuying process. It was in 2005 but our new broker closed quickly with less fees (recommended by our realtor) the biggest hassle was getting the first bank to release our FHA case number, it took some strong arming but was done.

[StartingOver10]

Both appraisal and title transfer to the new lender saving you time and miney.

[Anonymous]

Thats good!! If my first application that had the approval still has the case number attached with it will that give me a refer/eligible on a new application?