Help With Pre-Underwriting

[Anonymous]

Hello. I recently did an application with Wells Fargo for a mortgage going through the USDA Rural Development program. I brought them all required docs (paystubs, tax returns, w2's, bank statement, rent history, LOE) on 9/20. They wanted it to be pre-underwritten because a) I have a prior foreclosure from 10/2007 and b) the home in question is a to-be-built so no one wants the mortgage to fall through 4 or 5 months from now. The LO I am working with told me we should know something by 9/24 but it is now 9/30 and I still haven't heard. I don't know if no news is good news, as they say, or what to think. Some background: my scores are TU 641, EQ 656, and EX 659. The one other hang-up besides the foreclosure was with USDA they want a 29% PITI ratio and mine was something like 29.9% without factoring in any overtime, which I provided 8 paystubs to prove OT pay was regular. I have had no new lates since the foreclosure at all, and all ancillary baddies from the time period have been cleaned up (charged off CC's, CA's, etc.) My CC utilization is like 2% and I have an auto loan. Can anyone give some advice? Is this a typical situation? Should I worry or is this par for the course in the new credit environment? Thanks.

[DallasLoanGuy]

find a local usda...specialist..... your blood pressure will thank you

[Anonymous]

I was planning to do that but the builder says we have to go through WF. And could you elaborate on your response, please?

[Anonymous]

wells fargo is a pain I think is what he was saying.

that said, everything they are saying makes sense.  The builder can give you certain incentives if you use the lender they prefer so that may be your only option if you are already over max DTI and can not afford to come out of pocket to make up for any incentives they are giving you.

The OT has to be documented for 2 years and then averaged over that time period to be counted, so a few months of paystubs will not help.  If it is on your last 2 years taxes, then they will be able to count it.

Lastly, it all makes alot of sense.  You are still les than 3 years post foreclosure and are trying to get a loan with what appears minimal down (I am assuming this based upon the USDA loan but I could be wrong) and with a DTI higher than normal.  .9 % may seem like little to you, but that is .9% above the maximum, not the ideal DTI.

I am not sure what your options are as to different lenders without knowing the whole file, but my guess is that you have a difficult file to underwrite, and that your file got pushed back so they could finish any files actually closing for the end of September.  (any time a lender tells you they are going to have something for you towards the end of the month, do not hold your breath unless you are closing...) Too often they get backed up and they HAVE to close certain files and your file gets pushed back.  That is just how the system works and the LO may have been fairly confident that they would have an answer by now, but could not provide it.  In my experience, most LO's do not call unles they either have information or need information. 

[Anonymous]

Thanks for the input mickie08. The foreclosure is exactly 3 years old now, with no new bad marks since then. The reason we are going USDA is because of our reserves, I would guess. I have the 3.5% down for FHA and the seller is paying the closing costs, but we wouldn't have much of anything left over in the savings. Here in DE there is a mortgage bond program we could use also, FHA guidelines with a fixed 3.99% 30 year note. With that program they also have available a $10k deferred interest/payment loan for the downpayment that would allow us to keep the $10k we have saved as our reserves. WF kind of pushed me in the USDA direction @ 4.375%, not sure why, PMI maybe? Anyway, at what point should I start to worry? Its been about 10 business days since it was sent to the underwriters. The builder wants to raise the price of the model we want and if they do, it will be out of our $ range. Thanks for the help!