Reply
Contributor
kito0806
Posts: 80
Registered: ‎02-02-2010

Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

I went beyond the prequalification with Wells Fargo and got a preapproval from the LO using the automated underwriting system for an FHA loan (straight-forwarded approval, Level 1). Put $5k in earnest money and have 3.5% down. Provided all documentation prior to preapproval - 2 months bank statements, last 2 years taxes (self-employed), current lease, most recent credit card statements, copy of drivers license and social security card, MLS listing of house I wanted to buy - and completed all applications and forms. Preapproval letter stated "Based on your mortgage loan application which included verifying your income, assets and credit, your mortgage loan has been approved." Approval was subject only to appraisal and pest inspections. The LO told me I was good to go and to put an offer in on the house. Provided signed purchase agreement which was 10K less than what my preapproval was for. Had 30 days to get final loan approval. For the past 3 weeks, I've been told that the loan was in final underwriting (no appraisal ordered yet), then my LO tells me today that my loan was denied! It was sent to a 2nd level underwriter, but LO does not know why. Absolutely nothing has changed from the information I provided. I was honest and upfront about everything on my credit report and even wrote a letter of explanation prior to the preapproval. I'm floored, but the LO didn't give any indication she was going to do anything about it. I'm almost out of time and will likely lose the house. If anyone knows of any options, I would greatly appreciate any input.
Contributor
kito0806
Posts: 80
Registered: ‎02-02-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

Hi, Chris:

 

Thanks for your response.  No, I definitely don't feel as though I got a "fair shake" here. I was actually preapproved via the automated underwriting system by 3 different places (all Level 1 - "Approved - Eligible," all were provided with all documentation/information) but chose to put all my eggs in the Wells Fargo basket because 1) my realtor recommended this particular LO as he said she had worked with another one of his clients, and she communicated well and was quick in turning things around, 2) she was local (other direct lender was in Jacksonville while another was a mortgage broker, not a direct lender), and 3) she convinced me that she would get me the best terms and would stay in constant contact with me.

 

I have until Friday, Feb. 12 to get loan approval.  I was truly hoping that there would be something that would make Wells Fargo honor their loan committment with me, as long as the appraisal and inspections go okay, but I'm getting the impression that there is absolutely nothing I can do. Of course, the Wells Fargo LO told me yesterday she would talk to her processor and see what she could do and "get right back" to me. Well, more than 24 hours have gone by since that time, and she has not returned any of my e-mails or phone calls.

 

At this point, I have gone back to the other 2 places where I received preapproval and started moving full steam ahead with both of them.  As of yesterday, I paid the other direct lender an appraisal fee; they are in receipt of all of my documents, and they came back to me today with additional questions/document requests, which I provided within 2 hours. Yesterday, I asked the mortgage broker to send me updated documents to sign, which she did this morning (had old universal loan application, good faith estimate, etc. based on full purchase price of house - all which were created based on the MLS listing of the house I wanted prior to having a signed purchase contract), and I got all of that information back to her by about 2:30 p.m.  Given my current circumstances, I will go with whatever lending agency gets me across the finish line first. 

 

That being said, I have no idea if the sellers will give me an extension or not.  The title company the sellers selected is already contacting me and my realtor asking us for the name and address of the lending institution I am using.  It seems as though it may be a little late in the game to start completely new with another lender, but I'm desperate.  If you think you can help me, I'm more than happy to speak with you.

 

I did everything by the book to try and get this house.  I worked on my credit for 2 years (it's still not great), I told each LO my entire credit history over the phone, leaving no ugly detail out.  I did tons of research on the process, shopped for an appropriate loan product and lendor, and I made sure everyone pulled my credit within a 30 day period to avoid a big hit to my already fragile credit.  I provided all documentation and sought preapproval before ever making an offer on a house, as I did not want to waste anyone's time by effectively taking a house off the market if I was going to be denied for a mortgage.  The sellers were wary of me as a buyer since I was going through FHA and made the purchase offer contingent on financing.  I never dreamed that I would be in this predicament, and I hate the fact that their worst fears (and mine) might be realized.  It makes me look bad and untrustworthy, and I don't like it at all.  If you can help, I'm at your disposal.  Just let me know what to do.


 

New Visitor
retirementsucks
Posts: 4
Registered: ‎02-04-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

Kito,

 

Just out of curiosity, what was your FICO scores?  I'm sorry to hear this.  It sounds totally frustrating.  You you have any baddies still on your credit report? 

Contributor
CruiseLady2008
Posts: 89
Registered: ‎03-20-2008

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

Good morning,

I was in your predictament about 3 weeks ago.  Actually, Wells Fargo came to my rescue and I was approved by their Exception Department and Underwriting in 7 days.  I was preapproved by Regions in Sept.  Found a 2nd HUD house and made a contract on 11/12.  After 2 months with Regions, they denied me, this was after they had me request a 15 days extension with HUD.  I took a deep breath and immediately contacted by recommendations of my agent, Wells Fargo.  The loan officer was great!  I closed in 2 weeks and 2 days after I switched and I have a foreclosure that is 3 yrs old and an outstanding judgment that I am making payments on. With Wells Fargo, I was told that I would be denied because if you have an paid or unpaid CO, that is automatic denied if it is less than 7 years old.  I have unpaid CO that is for $485 with Wachovia.  The LO decided to send it to the Exception Dept.  They approved and did not request for me to pay it off.  Now, in a couple of months, I am going to make good of it because they made it all possible.  I now owe 4500 sq ft home for $139k!!

 

Do you know why they are denying you?  If I can be of any help, let me know.

 

Diva

2/12/11 FICO EQ 663
12/09 FICO EQ 646 EX: TU:657 EX 647 (Mortgage broker pulled)
03/08 FICO EX:523 TU:558 EQ:561
Homeowner 2/3/10
Contributor
kito0806
Posts: 80
Registered: ‎02-02-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

The 3 different lenders pulled it at 3 different times (but all within a 30 day period), so the mid-score ranged between 620 and I believe 657.
Contributor
kito0806
Posts: 80
Registered: ‎02-02-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

I am finding it hard to believe that unpaid collections are a cause for automatic denial with Wells Fargo when their LO used the automated loan processing system and gave me an "Accepted-Eligible" notification.  I do have old unpaid collections (secondary to advice I received from a financial planner 3 years ago), but my LO was aware of everything on my credit report before we started this whole process, as I told her both on the phone, in writing (explanation of credit letter), and it was on my credit report, which she had pulled.  If that were the case, why would she work with me from the beginning of January, before I even put an offer in on a house, to get pre-approval, then tell me to put in an offer, go through all the paperwork for processing, etc.?  That would be an incredible waste of time and effort on everyone's part!

 

I still have not received a clear explanation of why they are denying me, nor even of a clear denial.  Once again, my LO is avoiding all my e-mails and phone calls.  During my last conversation with her, she said the underwriters made note that they could not use my 2009 tax returns, which meant my debt-to-income ratio, etc. were all off.  According to them, since I own an LLC, I have to file business tax returns.  This is absolutely NOT true, as I am a single member LLC (sole proprietor), and my LLC is disregarded for tax purposes.  I told this to the LO both over the phone and via e-mail.  She stated she would contact her processor and get back with me.  That was this past Wednesday, and like I said, she is ignoring all of my phone calls and e-mails now.  

Valued Member
GreenPane
Posts: 48
Registered: ‎01-15-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

I had been looking at FHA loans since last August, and have been consistently following the news.  FHA loans are getting a lot harder to get, as the government has now told lenders they are 100% responsible for loans that default if they don not fall within FHA guidelines.  Some lenders apparently are using their own definition of 'FHA guidelines' that are stricter than they used to be.

 

Long story short, I found recently that the FHA lender I had been working with actually had nothing better than a regular conventional mortgage, so now I've been working with a lender at Bank Mutual.

 

The other thing, which I don't know a whole lot about, is the difference between versions of credit scores that you can pull here versus the scores that lenders can pull.  I believe that your EX report here is foolproof- but TU can vary because they don't offer the most up to date scores here.  The version that lenders use is tougher.

 

Wishing you the best!


Starting Score: 5/23/09 FAKO EQ630 TU594 EX607
Current Score: 3/12/10 FICO EQ632 TU644 EX654 (from lender)
Goal Score: 12/31/2010 750 "I can do it"!


Take the FICO Fitness Challenge
Contributor
kito0806
Posts: 80
Registered: ‎02-02-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

Hi, Greenpane:

 

Yes, I was just told by the mortgage broker I am working with (one is a broker, the other is another bank) that although she has been doing FHA loans for 20 some-odd years, she has started to see very unusual things recently.  To quote her: "It seems some of the underwriters are just making up rules as they go!"  Not very reassuring.  I've been following the news, as well, and I know that FHA has gone from the proverbial red-headed step-child to now being the loan of choice for many home buyers, so they are imposing guidelines that are becoming more and more stringent (understandably so, given the current mortgage mess).  To the best of my knowledge, my credit scores aren't the issue (but then who knows?!).  Anyway, I only have until Friday to obtain funding, so please keep your fingers crossed for me, and I'll do the same for you!

Valued Member
GreenPane
Posts: 48
Registered: ‎01-15-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

Do you have money to put down?  I was originally told that if I had anything more than the 3.5% it would be easy peasy..... but that was last August.

Starting Score: 5/23/09 FAKO EQ630 TU594 EX607
Current Score: 3/12/10 FICO EQ632 TU644 EX654 (from lender)
Goal Score: 12/31/2010 750 "I can do it"!


Take the FICO Fitness Challenge
Contributor
kito0806
Posts: 80
Registered: ‎02-02-2010

Re: Pre-approved for FHA through Wells Fargo then denied with 1 week left to obtain funding. HELP!

Yes, I have the 3.5% down but can go up to 5% if need be.  Purchase contract is for $265k.  I'm truly hoping my Wells Fargo situation was just an anomoly and due to a really bad LO and/or underwriters who don't know much about the self-employed and tax laws for single-member LLCs (those laws changed fairly recently, in the last couple of years, from what I understand).

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+