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Contributor
VintageGal1011
Posts: 166
Registered: ‎05-26-2011
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Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

We've been pre-approved for a loan through USDA direct (no subsidy).  We've been looking at homes, found one we love, and have been bidding back and forth (currently waiting for a counter).  Yesterday, my husband lost his job.  His income was only supplemental, but a fourth of our income. 

 

What happens now to our pre-approval?  Do we stop bidding?  No one will probably know the answer to this, but do you think USDA would give us a subsidy now for my husband's missing income?  Or will they lower our pre-approval amount?  Or scrap our loan all together?

 

I told USDA already and the guy was in a hurry so I didnt get to really ask questions.  I asked if our loan is "ruined" and he said he couldnt really say and that they'd redo the numbers.

 

We're both trying to find jobs, me a 2nd job, to try and save our loan. 

Contributor
VintageGal1011
Posts: 166
Registered: ‎05-26-2011
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Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

I'll reply to myself.  I found this in USDA's handbook online.  My take is that they'll consider us for the subsidy and our loan shouldnt change? 

 

D. Reverifying Income
An applicant’s income must be reverified before loan closing if: (1) the closing
will occur more than 120 days after the date of the last verification of employment; (2)
there is evidence to indicate a change in financial status; or (3) the applicant’s
employment status had changed within 6 months prior to submission of the application. 
All reverification activity should be documented carefully.
If the income reverification indicates a significant change in income, the Loan Originator
should take the following steps:
• Verify that the applicant is still income-eligible.  A program loan cannot be granted if
the applicant’s adjusted income exceeds the moderate-income level at closing. 
Regardless of whether the applicant’s income decreases or increases to change their
status from very-low or low income, no changes are needed on the loan obligation. 
(There are no income restrictions for nonprogram applicants.)
• Determine whether the applicant is eligible for payment subsidy.  Payment subsidy
may be granted if the applicant’s adjusted income is at or below the applicable
moderate-income limit.
• Consider whether the applicant could obtain 100 percent private financing and refer
the applicant to a private lender, if appropriate.
• Confirm that the applicant has adequate repayment ability. 

Valued Contributor
BrianB_The_Loan_Professor
Posts: 1,381
Registered: ‎07-29-2008
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Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

[ Edited ]

You need to tell them now - if you follow through without disclosing this it is technically fraud - the loan papers you have at the end you sign will still have the outdated info

These days almos all loans have a verification of employment done within a few days of closing to make sure no one lost or changed jobs without disclosing.

If you still qualify without the income you should be fine

if it is needed you may have to down size the loan - not sure about direct program since we only deal with the guaranteed 

but whoever you are working with will know

 

 

edited I reread and saw part of my response was incorrect

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Brian B The Loan Professor
Mortgage Banker Lending in all 50 states -
Senior Contributor
Booner72
Posts: 3,889
Registered: ‎05-24-2011
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Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

I just went through all this FHA business last week.  My LO did a VOE about 2 weeks before my file hit the UW, then had to email to my employer again as a condition of the UW (they needed to know what a deduction was), then they called the morning of the funding of the loan to make sure I still had that job!  Boy was I glad I work where the company runs 24/7!

 

My realtor told me a story about a guy who quit his job for a better job, his original boss was so mad that he was leaving, that when they called to verify employment, the old boss said he didn't work there anymore, but the guy was STILL working there as he hadn't quit yet.  The loan was stopped dead in it's tracks.

 

STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
CLOSED FIRST HOME 8/19/11 EQ-630 EXP-691 TU04-653
CURRENT: EQ-701 EXP-??? TU08-720
Valued Contributor
BrianB_The_Loan_Professor
Posts: 1,381
Registered: ‎07-29-2008
0

Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

if he knew that he was quitting thats what they are supposed to say but it sounds like he may have got a little more satisfaction out of that one - buying a house and changing jobs is never a good idea - 

Had one recently where someone changed jobs after we started a USDA loan

got to UW they did a new VOE and his income now exceeded the limit for a USDA by a small margin - we were dead on the spot

unfortunate because this was A++ type borrower and too far along to shift gears and keep the house on contract.....

 

 

 

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Brian B The Loan Professor
Mortgage Banker Lending in all 50 states -
Contributor
VintageGal1011
Posts: 166
Registered: ‎05-26-2011
0

Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

Well, good thing Im an honest person.  Id rather find out what happens now than at closing.  Im crossing my fingers for the subsidy saving our day.  We didnt qualify before, I hope we do now.

New Member
taurusgirl
Posts: 3
Registered: ‎05-17-2011
0

Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

I am in this same situation. I am in the middle of underwriting and just got fired a few days ago from a job I had for two years. I didn't tell my lender right away because I panicked. I have two interviews scheduled for tomorrow. I was being paid a salary plus commission and my next job will be based on similar figures. I plan to tell my mortgage broker tomorrow. my former employer received the VOE but said he would just ignore the letter and not answer the phone when they call. Do you think the possibility of this loan being approved is over or do you think the bank will suspend the process for a few days until I get a job offer? This is a usda loan. Nationstar is the broker. Has anyone ever experienced something so devastating? This is a new construction. Ive already picked the lot. So depressed.

New Member
taurusgirl
Posts: 3
Registered: ‎05-17-2011
0

Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

I just posted under this topic. Can you please give me some advice? My post is the last one.

Established Contributor
CreditCrusader
Posts: 799
Registered: ‎09-27-2011
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Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...


taurusgirl wrote:

I am in this same situation. I am in the middle of underwriting and just got fired a few days ago from a job I had for two years. I didn't tell my lender right away because I panicked. I have two interviews scheduled for tomorrow. I was being paid a salary plus commission and my next job will be based on similar figures. I plan to tell my mortgage broker tomorrow. my former employer received the VOE but said he would just ignore the letter and not answer the phone when they call. Do you think the possibility of this loan being approved is over or do you think the bank will suspend the process for a few days until I get a job offer? This is a usda loan. Nationstar is the broker. Has anyone ever experienced something so devastating? This is a new construction. Ive already picked the lot. So depressed.


Keep in mind the steps to the USDA loan program:

 

1. Pre-approval

 

2. Accepted offer on the home within the bounds of your pre-approval amount

 

3. Sign application with loan details

 

4. Appraisal

 

5. Underwriting

 

6. Closing

 

In Step 5, underwriters verify employment history. If what you told them doesn't match what they uncover during the income verfication process, you might lose them altogether. Better to be honest than have the rug yanked out from underneath you after months of work.

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Shogun
Posts: 12,952
Registered: ‎04-15-2011
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Re: Job loss, loan pre-appoval, bid on a house- Need help loan guys, or anyone else...

Tell them now, be upfront and honest with them.   You may have to wait awhile to get your mortgage, but at least it will be done in a legal fashion.   

 

I'm sorry to hear about your situation and I'm wishing you the best of luck for your interviews!


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