Do I have a chance at FHA automatic underwriting approval?

[Anonymous]

Here's my situation:  Long but please read and help :-)

I recently sold my home in GA and relocated back to CA.  I had my current mortgage for only 18 months before relocation and have had zero missed payments.  When I called my current morgage broker and let them know of my relocation I was instantly given preapproval upon supplying them with my W2's, income/bonus info and so on.  We found a home in CA and had been in escrow for about a month (45 day escrow).  We had everything set up to actually close a few days early when all of a sudden I was told that they couldn't do the loan. He never mentioned any problems with my credit score and I hadn't been looking into myself.  Basically it was a mess.  I've had recent lates on two installment accounts (both auto) with the most recent showing at 3/2015.  I also had a credit card we had cancelled last year but didn't actually cancel hit me with a 30, 60 & 90 day late (12/14, 1/15, 2/15) and another credit card hit me with a 30 day late 1/2015.  I also was pretty maxed out on my credit card which I had known about but had also recently paid all off upon receiving the equity from sale of home...just hadn't posted to CRs yet.

I believe when they finally told me they couldn't do the loan, my middle score was a 566 (I was putting down 13% on an FHA) so they told me that's the reason for my pre-approval.

In the past couple weeks I was able to get all of the recent late payments from my credit cards removed and am now showing zero balance on all credit cards except $17 on one for Equifax and Trans Union & Experian still have one account that is showing $1900 but should refresh any day now.

I just purchased the 3 bureau CR from myfico.com and my current (mortgage) credit scores are EQ: 636, TU: 661, EF: 655.  I think the TU & EF will get a small additional bump once the last CC shows zero balance next week.

My question: is there a chance that I could receive an automated underwriting approval even though I have recent installment lates on 2 different auto loans?  Still planning on putting 13% down on FHA and have about $26K in 401K.  Debt to income with loan approx 41%.

[sports1965]

I think lenders require 12 months of ontime payments after  a late payment

will u be approved by the AU ?Probably not

[Anonymous]

Thanks. I knew I needed 12 months of on time mortgage payments but wasn't sure if I could get away with some installment late payments and was hoping that my larger down payment and 401K balance would be enough compensating factor in their algorithm.

[Lemmus]

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@Anonymous wrote:

Here's my situation:  Long but please read and help :-)

I recently sold my home in GA and relocated back to CA.  I had my current mortgage for only 18 months before relocation and have had zero missed payments.  When I called my current morgage broker and let them know of my relocation I was instantly given preapproval upon supplying them with my W2's, income/bonus info and so on.  We found a home in CA and had been in escrow for about a month (45 day escrow).  We had everything set up to actually close a few days early when all of a sudden I was told that they couldn't do the loan. He never mentioned any problems with my credit score and I hadn't been looking into myself.  Basically it was a mess.  I've had recent lates on two installment accounts (both auto) with the most recent showing at 3/2015.  I also had a credit card we had cancelled last year but didn't actually cancel hit me with a 30, 60 & 90 day late (12/14, 1/15, 2/15) and another credit card hit me with a 30 day late 1/2015.  I also was pretty maxed out on my credit card which I had known about but had also recently paid all off upon receiving the equity from sale of home...just hadn't posted to CRs yet.

I believe when they finally told me they couldn't do the loan, my middle score was a 566 (I was putting down 13% on an FHA) so they told me that's the reason for my pre-approval.

In the past couple weeks I was able to get all of the recent late payments from my credit cards removed and am now showing zero balance on all credit cards except $17 on one for Equifax and Trans Union & Experian still have one account that is showing $1900 but should refresh any day now.

I just purchased the 3 bureau CR from myfico.com and my current (mortgage) credit scores are EQ: 636, TU: 661, EF: 655.  I think the TU & EF will get a small additional bump once the last CC shows zero balance next week.

My question: is there a chance that I could receive an automated underwriting approval even though I have recent installment lates on 2 different auto loans?  Still planning on putting 13% down on FHA and have about $26K in 401K.  Debt to income with loan approx 41%.

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...those lates still showing will kill any FHA approval, auto or manual ...your mid score is above the 640 break point but FHA guidelines require no negative credit events in the past 12 months regardless of credit score ...afaik unless you can get those very recent car loan lates deleted, you're looking at another 10 months in credit purgatory

...a lazy loan officer left you hanging with this way too long ...even the most casual look at your file should have raised big red flags immediately

...you should give the Repairing Your Credit forum here a look for ways to possibly fix those lates ...hth

[Anonymous]

Thanks for the feedback.  I was hoping this was not the case...and I really wish I would have known this before removing contingencies on the $4,000 I have in escrow.

[Lemmus]

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@Anonymous wrote:

Thanks for the feedback.  I was hoping this was not the case...and I really wish I would have known this before removing contingencies on the $4,000 I have in escrow.

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OUCH! 

[Anonymous]

From what I've read in the FHA and HUD handbooks, no lates on mortgage loans in the last 12 months, but other lates can be explained with a LOE, especially if it hasn't been overall pattern and you have corrected whatever caused it. But there could be lender overlays that would be more strict. Googling gives me mixed results.

Maybe a loan office or lender reading can clarify?

[Anonymous]

Well I had two 30 day lates that were within the calender year and and I still got an FHA mortgage commitment.  I had two write explanations for the lates but all went through with a manual underwrite.  The deal however did not get done people found out they owed during title search they owed MUCH more than they thought.  So I am involved in a short sale now....crossing my fingers

[Lemmus]

...were your lates on installment loans or revolving credit accounts?

[Anonymous]

They were installment. Ford credit and BMW Financial. I have had two mortgages.

Side note: Just sold my recent home 2 weeks ago and it had zero late payments. So I've shown I've paid my mortgage on time even though that doesn't seem to matter.