FHA Loans and NSF Fees

[JenThompson777]

Hi Everyone,

First off - Sorry if this has already been answered previously.  

If anyone happens to know anything about this, please help.  I had a Lender in line, I had met all of their requirements that they asked of me.  I got an accepted offer this morning on a HUD home.... and then........  The Lender denied my loan because of a couple of NSF fees on my statement within the last two months. 

I also have 3 collections on my credit report, but he wasn't concerned about those as much as the NSF fees.  Which to me, is a bit crazy seeing as how I have perfect bill payment history - including rent - for the last two years that they were looking into.

Anywho, my main question is... does anyone happen to know of any Lenders that don't have an automatic denial on FHA loans because of NSF fees?  I have read in many places that people have had no problem getting an FHA loan even with recent NSF fees.  It depends on the UW, I've read.

But I'm no expert. Any help is greatly appreciated.

I have basically tomorrow to come up with a new Lender to put on the offer or its back to the drawing board for me. 

Thanks! Jen

[Anonymous]

Did you ask if they could use a "VOD" in lieu of an itemized statement? Regardless NSF's as currently as two months ago is a pretty big red flag, but mistakes happen and if there is a good explanation for the NSF's some lenders let you write a letter of explanation. Best of luck!     

[Anonymous]

NSF fees are a pretty big red flag.  especially if it was more than one time (not as big a deal if a couple come thorugh at once as having separate instances).  If they see a spending style that is very paycheck to paycheck and close to OD on a regular basis, and then see a couple OD's pop up, this will greatly concern them no matter what you explain.  Even more so if your expected mortgage payment is more than your rent right now.  If they see a mistake, a unexpected expense, or some other reason that can be explained and will show that the risk they are about to take on you is safe, then NSF is OK.  IT all depends ont he situation, and how borderline your file is.  Almost invariably, it is files that are already on the borderline for one reason or another that the NSF's have a larger impact.

[Anonymous]

I am concerned about this too.  My rent check was "covered" by my bank for one day because my direct deposit was a little late last month.  It wasn't returned but the bank did charge me $20.  On a side note, when in the loan process do they ask for bank statements?  I just made an offer yesterday and have already been preapproved. 

[ShanetheMortgageMan]

An isolated NSF wouldn't be a reason for denial, however if there is a pattern of mismanaging finances (late payments, NSF's, etc.) then an underwriter may feel you present too much risk and decline.