This will probably be wordy.
I received my FHA loan commitment this afternoon with two conditions I'm not thrilled about.
1 - they want me to pay a Cap1 AF Charge-Off from 2012 in FULL - $5k - DOFD 2011
2 - they want a bank statement closing July 2016 showing I have sufficient funds to pay the above account in full AND 7k of the closing costs (which include balance of 3.5% downpayment)
My issues are this:
The capital one auto charge-off was included in my loan application at the 2% or 5% I can't remember the necessary rate against my DTI and it is due to fall off my reports in 2018 - with multiple conversations among myself, Cap1 and Creditplus resulting in Cap1 repeating multiple times that because of the age of the debt they will not sue me. So, I'd rather not pay $5k - when I called today, they offered a settlement of 2400.
I had planned on using some gift funds to cover downpayment/closing costs to some extent and my LO knows this.
Ultimately, I don't have enough money in my immediate reserves to pay Cap1 in FULL and pay the 7k closing costs. This was a somewhat opportunistic home purchase attempt given market conditions in our part of NJ and the recent climb in my mortgage scores to range in the 670-705 range (they've continued to climb upward since our app).
I'm supposed to hear from my LO tomorrow about this stuff...and when I texted him this morning about the commitment status and if there was anything major I need to deal with...he said no "everything looks good"...well...that's not exactly the case...unless he comes at me with some better news tomorrow.
I feel as though UW did not use FHA guidelines in drafting the needs statement.
Here's what the needs section stated:
Satisfactory evidence that the following accounts are paid in full: all judgments and Capital One Auto Collection account.
Satisfactory that the following disputed account is not currently being disputed. Credit to be re-scored FICO no less thatn 630 and approve eligible findings to remain in effect for the following account - Capital One Auto Finance - additional terms and conditions may apply.
Satisfactory inquiry letter.
Satisfactory July ending bank statements evidencing assets to close in the amount of no less than $7760 and sufficient assets to cover judgments and collection account - document and explain all large deposits.
Satisfactory previous VOE to cover the most recent 24 month period for the borrower.
Satisfactory evidence of EMD deposit in the amount of 1000.00 clearing the borrower's account supply copy of check for same.
There were a couple of judgments that I never received warrants of satisfaction for. I obtained all of those early on in this process. The inquiry letter I assume is to explain one of the following: new credit cards in March (before I planned on pursuing a home purchase), an inquiry that my LO said would be ok because I needed to obtain a bond to handle my uncle's estate, or the recent inquiry from one of the collection agencies that I settled a judgment with early in the process.
So really, I'm only concerned about the fact I'm 1k short on my bank account statement for July - like I said, I planned on having gift funds which my LO said were to be presented as a check from the gifter at closing. And if I had to, I could use my own funds after 8/11 when I'd have close to 9k in the bank. And then of course the Cap1 AF PIF. It would be much easier for me to pay the settlement amount.
My DTI are all low, I've been busy the past 18 months repairing my credit and that involved shelling out a fair bit of money to collection accounts and judgments over the past 12 months.
If anyone has any insights, I'd appreciate it.
We are set to close 8/16, but if the conditions above are 100% accurate and the LO can't offer me better news...I'm not sure I can meet the conditions.
Thanks
Thanks Dallas.
I know the requirements vary by lender and their overlays. My LO never said anything about this being an issue that would need to be paid for prior to/at closing. He's known for 2 months about the charge-off and said it wouldn't be an issue. That's part of what's rubbing me the wrong way.
They are a non-bank lender that came highly recommended from a realtor friend of my girlfriend. Up to this point, they moved quickly and were great to work with...so...I'm going to wait and see what my LO says about this before I out them. He did not seem stressed about this and their team has known the fine details of my situation, so maybe he knows something I don't.
In the meantime, I've identified two lenders that appear to have good reputations and no overlays in NJ.
Thanks. Will post an update.
Spoke with the lender and outlined my concerns. They went back to the underwriter and came back with:
The charge-off calculations regarding DTI were not calculated to the UW's satisfaction and UW did her own calculation which apparentely threw my DTI off sufficiently that she required it be paid off. It was NOT a lender overlay. The UW said that paying the settlement amount would be fine. I've had no luck getting the charge-off off EQ/EX for the past 18 months, so the PFD agreement I reached with Cap1 is super beneficial - as of September my reports should be completely clear across the board.
The bank statement did not need to reflect the $7760 potential closing costs since gift funds are a factor, she would just need my updated bank statement.
The gifter's July bank statement, cashier's check for gift amount, and a transactional history from the end of July to the date of the cashier's check will suffice for the gift funds.
After today, all conditions will have been met and submitted...so we will see what happens.