Mortgage loan modification in the past, hard to get jumbo loan now

[Anonymous]

To make a long story short, I got a mortgage loan modification with principal reduction 2.25 years ago.  I also had four 30 (in blocks of 2) days late around that time period on a different mortgage.  Other than the those two items, my credit is nearly perfect with 10+ years in solid credit history.  Latest FICO score is 750-780 with 75K credit limit , no debt except for car loan and student loan and the two old mortgages.  Even with 20-30% down on a jumbo loan, I have been declined by almost every big bank.  Even mortgage brokers are having a tough time as getting a jumbo is way more difficult with the loan modification.  Has anyone run into that problem?  Luckily my house isnt closing for another 4 months and I think the local CU will come resuce me.

[bdhu2001]

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@Anonymous wrote:

To make a long story short, I got a mortgage loan modification with principal reduction 2.25 years ago.  I also had four 30 (in blocks of 2) days late around that time period on a different mortgage.  Other than the those two items, my credit is nearly perfect with 10+ years in solid credit history.  Latest FICO score is 750-780 with 75K credit limit , no debt except for car loan and student loan and the two old mortgages.  Even with 20-30% down on a jumbo loan, I have been declined by almost every big bank.  Even mortgage brokers are having a tough time as getting a jumbo is way more difficult with the loan modification.  Has anyone run into that problem?  Luckily my house isnt closing for another 4 months and I think the local CU will come resuce me.

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Is the score you list your FICO mortgage scores i.e EQ Beacon 5; TU FICO 04; EX v2? I'm not a mortgage person.  Shane or one of the other's will need to help you with specifics.  From what I read on bankrate the following is needed to qualify for a jumbo mortgage.

Qualifying for a jumbo mortgage

While the underwriting process for jumbo mortgages is similar to that of a conforming mortgage, the requirements differ.

"There is no (private mortgage insurance) with a jumbo mortgage, so the down payments are larger and, usually, the credit score can be no lower than 700," Rapice says. "If you are going to apply for a larger mortgage amount, of course you're going to have to be able to show the income and the assets in order to pay that."

The maximum debt-to-income ratio for jumbo loan borrowers is 45 percent. Additionally, jumbo borrowers need at least six months' worth of reserves in their bank accounts after closing, while conforming loan borrowers may be required to only have one or two months' worth of mortgage payments set aside. The required reserve amount for jumbo borrowers can sometimes be 20 percent of the loan, Adamo says.

Borrowers may have to fork over a huge chunk of change, but there are perks to a jumbo mortgage. For example, jumbo loan rates have reached historic lows, and interest on loans up to $1 million is tax-deductible.

"Jumbo borrowers today are getting the best rates in the history of our country," Adamo say

Having said all that; In my area, people are doing  80/20 and 70/10/10 to get around PMI and jumbo loans.  

[Anonymous]

Yes my FICO is over 750, so is my wife's.  The issue is the modification, they treat it like a short sale and therefore I have to wait 3 years.  It seems like they are firm on that too.  Luckily I found a credit union that will do it, at the expense of 25-30% down.

[ljohn27]

How do they know you had a modification? Is it noted on your credit report?

[DallasLoanGuy]

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@Anonymous wrote:

To make a long story short, I got a mortgage loan modification with principal reduction 2.25 years ago. 2.25 yrs ago you didn't pay your mortgage according to the original terms....  I also had four 30 (in blocks of 2) days late around that time period on a different mortgage.  Other than the those two items, my credit is nearly perfect with 10+ years in solid credit history.  Latest FICO score is 750-780 with 75K credit limit , no debt except for car loan and student loan and the two old mortgages.  Even with 20-30% down on a jumbo loan, I have been declined by almost every big bank.  Even mortgage brokers are having a tough time as getting a jumbo is way more difficult with the loan modification.  Has anyone run into that problem?  Luckily my house isnt closing for another 4 months and I think the local CU will come resuce me.

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[DallasLoanGuy]

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@Anonymous wrote:

Yes my FICO is over 750, so is my wife's.  The issue is the modification, they treat it like a short sale and therefore I have to wait 3 years.  It seems like they are firm on that too.  Luckily I found a credit union that will do it, at the expense of 25-30% down.

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you are lucky to get that

[Anonymous]

Given the amount of 600-650 FICO score applicants with less than 5% down getting mortgages, the risk isn't much different IMO.  

[StartingOver10]

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@Anonymous wrote:

Given the amount of 600-650 FICO score applicants with less than 5% down getting mortgages, the risk isn't much different IMO.  

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Actually, the risk is different because you have gone through a recent modification so the lender has an idea of your reaction to a hardship.

I am not saying that you shouldn't buy and finance a home at all - I am saying this new lender is protecting the likelihood of a future modification by reducing the LTV. That is a realistic reaction to your credit profile as it exists today.

The lenders do the exact same thing for all of the others that have been through recent derogs - a combination of time and reduction of LTV.  If you look at the derog matrix guidelines, the shorter the time from the derog, the larger the down payment requirements. This is true for each type of loan (conventional, FHA/VA, USDA). The exception to this is hard money loans or private loans which are low LTVs anyway.

The scores you reference are only one aspect. Mortgage lenders look at the body of the report to determine what makes up those scores. If someone had a score in the 600-650 range and a recent mortgage derog, they too would be required to put down more ....or wait until they meet the time guidelines.

[ljohn27]

How does the new lender know that you had a modification if it's not noted on your credit report?

[StartingOver10]

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@ljohn27 wrote:
How does the new lender know that you had a modification if it's not noted on your credit report?

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Mods are noted on credit reports - at least on the reports I have seen. They are recorded in the public records too, just like the original mortgage.