I am flabbergasted and wondering what you all think...

[Anonymous]

My USDA loan was nixed today after going through underwriting and GUS last week; we were supposed to close this Friday the 27th but when I called my lender this past Monday he didn't remember that--he fumbled around and asked me, "weren't we closing on the 6th or 7th?"  Then he said he hadn't submitted the final package to USDA to "dot the i's and cross the t's" but he would do that Wednesday and it should be turned around quickly..  I told him Fannie Mae (the seller) would need to be notified--they had already given us one extension but someone needed to call their realtor and postpone Friday's closing if needed to one day next week..  My lender told me he would call my realtor and let her know what is/was going on..    My FICO score is 661 and hasn't changed; I have kept $3,000 in my bank account for over a month...  I declared bankruptcy in 2005 and was told hmmm that it shouldn't be a problem.  I have 2 credit cards with a $25 balance on each one...  I made one bad mistake in the last 2 weeks:  I applied for a Sears credit card thinking that we needed a water softener--I cancelled the application that night but it dinged my credit report but it didn't changed my FICO and I bought a TV off of Ebay for $599 and I'll be damned if I didn't put it on my Ebay credit card..  All this is one night; I had a total lapse of judgement that I can't even explain but I called PayPal to rectify TV situation and ended up paying cash for TV the day after and PayPal told me they updated their credit scores every 24 hours..  Anyway, the loan w/USDA fell apart over the Sears card application and the purchase of the TV..  They have now told me to come up with $4800 for an FHA loan otherwise I lose my earnest money, fees, etc., for a total of $2000 and the house...  I want to cry..  

[MYFICOisWACKO2]

Oh hun, I am really sorry that this has happened to you.  The first thing your LO should have told you was do NOTHING until you get the keys to your house.  I was in a bad situation that I am pretty optimistic about myself.  I have been dealing with a LO that has been sending me round and round with different tactics and now the builder on my home is getting ready to drop my contract and they are talking about keeping my earnest.  I totally understand what you are going through.  Is it possible for your realtor to work out and arrangement with your seller to allow you a month or so to get the DP for the new loan program?  I would really try to exaust all my options before settling with the idea that you are going to walk away with nothing.  My heart pangs for you.  Wishing you nothing but the best.

[cdtotten]

Purchasing the tv on your ebay credit card should have no effect on the loan. CCCs only report your updated balance once a month (usually 1-2 days after statement cuts), and even then, a new balance that size shouldn't make that big of a difference. That being said, applying for a new credit card is a BIG no-no. It indicates you are strapped for cash and increases the risk for the lender. I am not surprised at what happened there.

Personally, I wouldn't be opening a CC just to buy a $400-500 item anyways, but unfortunately this was a bad move. I wish you luck on getting this worked out with another loan package.... and at least you have now learned a valuable, but costly lesson.

[MaisCher]

I'm so sorry to hear that! I know how my stomach was in knots the final days before closing, and while waiting for USDA approval. Unfortunately I have to echo what everyone else said. One of the forms my loan officer made me sign prior to even getting started, was something showing I understood a few important things about the process. Number one on that list was applying for new credit. In BOLD print it stated not to apply for anything until I had closed on the house and the keys were in my hand.
I hope it works out for you.

[Lel]

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@Anonymous wrote:

My USDA loan was nixed today after going through underwriting and GUS last week; we were supposed to close this Friday the 27th but when I called my lender this past Monday he didn't remember that--he fumbled around and asked me, "weren't we closing on the 6th or 7th?"  Then he said he hadn't submitted the final package to USDA to "dot the i's and cross the t's" but he would do that Wednesday and it should be turned around quickly..  I told him Fannie Mae (the seller) would need to be notified--they had already given us one extension but someone needed to call their realtor and postpone Friday's closing if needed to one day next week..  My lender told me he would call my realtor and let her know what is/was going on..    My FICO score is 661 and hasn't changed; I have kept $3,000 in my bank account for over a month...  I declared bankruptcy in 2005 and was told hmmm that it shouldn't be a problem.  I have 2 credit cards with a $25 balance on each one...  I made one bad mistake in the last 2 weeks:  I applied for a Sears credit card thinking that we needed a water softener--I cancelled the application that night but it dinged my credit report but it didn't changed my FICO and I bought a TV off of Ebay for $599 and I'll be damned if I didn't put it on my Ebay credit card..  All this is one night; I had a total lapse of judgement that I can't even explain but I called PayPal to rectify TV situation and ended up paying cash for TV the day after and PayPal told me they updated their credit scores every 24 hours..  Anyway, the loan w/USDA fell apart over the Sears card application and the purchase of the TV..  They have now told me to come up with $4800 for an FHA loan otherwise I lose my earnest money, fees, etc., for a total of $2000 and the house...  I want to cry..  

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Hi curly_lettuce, and welcome to the FICO Forums.

Does your purchase contract have a financing contingency?  Check your documents carefully.  If so, then you might be able to recover your earnest money.  The fees that you have already paid (which might include an application fee and appraisal - just guessing here) probably cannot be refunded.

With regard to the confusion about the closing date, that does seem irritating but unfortunately it doesn't seem to be the cause of the problems with final loan approval.

[mauve]

Is it possible that getting Sears to do you the favor of removing any reporting of that application would help?

I was at Macy's in December and was asked to open a card - I told them that I'd do it IF they could just re-open my dormant card.  She said I could, then told me she opened a new card...I asked her to totally cancel the application as if I'd never done it and the only remainder of that situation is an inquiry.  I signed a statement as a condition of approval that said that no inquiries listed resulted in new credit.  Every inquiry except for Macy's was a mortgage inquiry. 

[ShanetheMortgageMan]

Fannie Mae definitely has that financing contingency that Lel referenced.

Applying for new credit and increasing credit card balances isn't a good idea, but doesn't always kill a loan.  It seems to me that something about your situation was somewhat borderline with the approval and the recent activity was enough for the underwriter to call it quits.

I'd definitely choose USDA over FHA if I had the option.  I almost think that it'd be a 50/50 call by underwriters on this type of thing, particularly if the remaining funds you have as well as the payment on the amount you put on your credit card doesn't disqualify you.  So your options are likely:

1.  Ask for a loan denial for USDA and if you have a financing contingency in place still you should be able to get your earnest money back

2.  Put up the extra money for an FHA loan, you may look at it as an extra $4,800, but if you do not buy this home and buy another, your ~$1k in appraisal/home inspection/other fees you will not get back.  So another home will cost $1k more off the bat.

3.  Apply with another lender for USDA, be sure to bring up the issues that your current lender had with approving you so you don't walk into the same exact issue again

[Anonymous]

You all have been awesome.  Thanks ever so much for the responses to my post.  We are going to do what Shane suggested and go for an FHA loan--we are supposed to close on the 17th of June--I freakin' hope so because I love this house and there is potential for us to bank some escrow money with it...  My sister suggested we reapply for a USDA loan, too, Shane, and if this falls apart we are going to try that route again...  I miss living in our own home so I hope the 17th will be it though.  Thanks again you all for the support; this is an incredibly informative forum--I'm so glad I found it!  Nancy

[Gray]

Wow. Keep us posted on what happens.

I personally will be going into a credit lock down the year and a half before applying for a mortgage. In other words, no revolving (carried) debt. In the six months leading up to the application, we will stop making credit charges. We currently run our monthly bills through our credit cards to maintain utilization, but have the credit cards debit our bank accounts to pay in full at the end of each month.