Frustrated and need help, PLEASE!

[xb5869]

So the other day me and my wife found a short sale that we are interested in purchasing after we viewed it.  I contact the LO that the realtor says he always works with and that specialized in 203k loans and explain my situation and what were looking to do.  I send him a tri merge that had previously been pulled a few months ago and ask him to look it over before pulling another to make sure he can do something with it before hitting me with another inquiry.  Middle score 687, and shows several disputed collection (3+ years old) accounts totaling about $11,000...  He says hes confident he can get something done, but needs to pull his own to run it through DU.  I agree to this, he pulls it and runs it, comes back and says that becuase the collection are disputed its a no go....  I email back and specifically ask if it is the collections themselves that are the problem or the fact that they are disputed, he says that its the fact that they are showing disputed b/c it artificially raises the scores.  I spend an hour or so getting all the disputed comments removed, contact him the next day to let him know so he can update and run it again.  He pulls another, my score drops (as expected) to 647, however all the disputes are removed.  He then emails me and says, now that the disputes are removed the guidlines state that the collections either have to be paid off, removed or in a payment plan for 3 months....... 

I'm absolutely furious right now as if he would have told me before i removed the disputes that i needed to pay the collections i would have taken out a personal loan and paid them, but now my credit scores are to low to get a personal loan to pay them and I still dont qualify according to him.  I thought that FHA's updated guidlines stated that the collections do not need to be paid, however a capacity analysis would need to be done and 5% of the amount would be used against the DTI of the new loan?.?.?

Shane or anyone else help me with where to go from here, im extremely frustrated at this point.

[DallasLoanGuy]

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@xb5869 wrote:

I'm absolutely furious right now as if he would have told me before i removed the disputes that i needed to pay the collections i would have taken out a personal loan and paid them, but now my credit scores are to low to get a personal loan to pay them and I still dont qualify according to him.  I thought that FHA's updated guidlines stated that the collections do not need to be paid, however a capacity analysis would need to be done and 5% of the amount would be used against the DTI of the new loan?.?.?

Shane or anyone else help me with where to go from here, im extremely frustrated at this point.

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http://portal.hud.gov/huddoc/13-25ml.pdf

They don't need 3 months of payments.... just the capacity analysis

Maybe that is their guideline overlay or they don't interpret the new rule like most lenders

can you referred to another lender?

[xb5869]

Its a broker, not a lender.

[ezdriver]

Unfortunately, it is not always possible to spell out every single condition for a loan approval up front. This is just the nature of the lending business. Also, as was pointed out in the other post, every lender has its own guideline overlays and they don't know upfront which will apply to any particular scenario until they work through it. don't get discouraged ... what goes down will rise again!

[mom22sonz]

That sounds very frustrating. Sorry to hear it.

[ShanetheMortgageMan]

Definitely a lender overlay.  Not all lenders do 203(k) loans, so perhaps the one(s) that this broker is approved to do business with all have a collection policy which says collections in total aggregate of $X,XXX or more need to be paid in full.

The loan officer you spoke with doesn't sound very thorough, as you are correct they should've pointed this out initially when they reviewed the previous tri-merge credit report you supplied to them.

There are still many FHA 203(k) lenders who go straight by FHA's guidelines on capacity analysis though, so if this broker isn't approved with one of those then it's time to continue your search elsewhere.