Need help after lender changed the score requirements

[stormi]

Hello everyone. I need some clarification of FHA. I signed a contract with a homebuilder to begin building a home this past spring. All old credit has been cleaned up and all credit cards have been paid to zero. When I started this process I was told that my score had to get to 620(middle). I have one collection account that I paid in January 2011 that was not updated as being paid. I finally got a letter from this collection co stating the bill is paid and my mortgage company is asking for a rescore. My currnet scores are EQ-629,TU-630, EX-636. My mortgage and sales agent informed me that the score now needs to be 640. Sales person said they knew this and if they thought the financing would have been a problem they would have contacted me.  I guess I need some advice, I was due to close in mid August and now I feel that me and my children could be homeless if the middle score does not reach 640. My landlord already has tenants to move in September 1st.

Any suggestions would be helpful.

[llecs]

OP, I split your post to form a new one here. I had to edit the title, but changed nothing else. If you'd like to change the title, click "Options" and then "Edit Message".

Welcome to the forums, BTW.

While I know little about mortgage loans, I'll take a stab at this.

Are ALL the CCs reporting $0? Can you see that on your reports? If so, try getting one to report a small balance of under 9% of the CL. Give that a shot and you might see a few gained. Odd as it may seem, all $0 balances isn't a good thing and getting one to report a very small balance might help.

Paid collections are equally damaging as unpaid ones. Mail the collection (assuming it is a collection agency and not an original creditor) a GW letter. Some might just delete and that'll help your scores in a big way. I'd probably call them too.

[ShanetheMortgageMan]

Well unfortunately you can't change what the lender requires that you are applying with, and guidelines change from time to time, so if they are requiring 640 then you'll have to get your scores there or find a new lender who doesn't require a 640 for FHA financing.  Most lenders will require a minimum of 600, 620 or 640 - some will even go down to a 580 or 500.  I'd continue with this lender but also look into backup options, you have a month so that should still be enough time to get things going with a backup lender (who may, in turn, turn out to be your primary lender).

[stormi]

Thank you both for your assistance. I am currenlty waiting for the rescore. The unpaid collection account was only showing on my equifax. I did receive an alert that showed a change in my Equifax CR.When checking my fico score it raised 21 points. I did try a GW letter, and the were not willing to change the reporting. I think since I am so close to the 640 I will wait to see what happens over the next month. I have made alternate plans to take over a friends apartment at the end of the month for a month, and hopefully everything will be okay no later than September. I will keep you posted.

[goodygoody]

Can you switch to a USDA loan?  They only need a 600 (though I'm sure your agent would have brought this up if you were buying in an approved area)...

[stormi]

The most recent update is that the rescore did not change my credit scores. I contacted my credit union and considered changing lenders versus waiting it out, they require a 620. While I am debating on what to do I contact the current lender about exploring other options that require a lower score. Low and behold they have a program for FHA that is for a 620 score and above. I wonder why I was not told about this. The LO said that she will prepare the loan documents and we will meet next week to discuss. I thought you signed the loan documents at the closing. " Here are her exact words: we have a program for FHA with a 620 and above.  I am working on the documents to create for you to sign.  I have to set the appointment next week so I can have the loan documents ready." Can someone clarify? The house is not completed and won't be for a few more weeks.

I am not familiar with USDA loans, I will look into that also.

[203bravo]

I'm sure your LO is preparing the new application and will go over that with you and have you sign that for the program.

[Booner72]

Yep.  I had 64 pages of loan documents to sign.  Which I had to sign twice since we switched the houses we were buying.  Fun times - It wasn't bad actually.  Interesting to see all the info etc.  It was no big deal bc LO scanned to me at work and I scanned back.  That sucks that you have to wait until next week to meet w/ your LO.  It didn't take mine long at all to get that stuff going--- a couple of hours.....  I am really realizing what a blessing my LO is.  I sent a letter to corporate headquarters of the mortgage corporation she works at raving about her. 

[stormi]

I wanted to give an update. I met with the LO and yes I had to sign all the documents. Once I got there, she explained the progam which is called OHFA (Ohio Housing Finance Agency), they will allow you to have a 620 or above. The interest is slightly higher at 4.5%. So it looks like the financing is a go, everything is in underwriting at this point. Can anybody tell me how long that shoud take?

[ShanetheMortgageMan]

From a couple others posts I've read the OHFA takes a little longer than a regular loan program - about an extra 5-7 business days.  Hopefully by now (2 weeks later) you have a pretty clear picture what the remaining timeline is.