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akinsey206
Posts: 5
Registered: ‎06-27-2011
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Recent salary raise pushed me past USDA Guaranteed income limit, after being approved

Hello,

 

I am in a very sticky situation.  I have been on my way to getting a USDA Guaranteed loan for my first house, and we were supposed to sign the final documents yesterday.  The loan underwriter said they need just a couple more things, one being an updated paycheck within 30 days of the loan date.  Here's the issue:

 

At the beginning of this month I received a salary raise at work, but I wasn't told about it until after the underwriting process.  When I was told about my pay raise, it never crossed my mind that I might have gone over the USDA income limit.  After sending my updated paycheck to the Loan Underwriter showing the update salary amount yesterday, it hit me, I was now over the USDA limit!

 

I brought up this fact with my agent and we brought it up to the lenders.  No one is sure what to do!  Today, the lender representative said to just use my paycheck from August 31, which would still show my salary before the raise, and would meet the condition of being within 30 days of the loan date.  However, my agents and the selling agent have said that this would still be considered fraud...  In my mind, if the lender has given the go ahead, I feel like we should be able to go ahead.

 

So, my question is, would it really be that bad for me to comply with the lender's suggestion and just sign the documents with an old paycheck of mine?  What are the chances of this coming back to haunt me?

 

-Anthony

Senior Contributor
Booner72
Posts: 3,889
Registered: ‎05-24-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved

Hi Anthony - there was another person here wondering what would happen if her boyfriend moved in with her, thereby, bringing in his income.  And another woman wondering what to do if she decided to go back to work.  All conclusions came that you need to be honest and if you didn't, it would definitely be fraud.  I believe that they can force you to refinance the loan if it is found out at a later date.  Congrats on the pay raise, but you might need to go FHA or conventional. During my recent closing, they underwriter called my employer three times in addition to the letter of employment.  I just don't see how you can get around this even if you did decide to try and hide the new information.

 

Good Luck.

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Valued Contributor
ptr2593
Posts: 1,486
Registered: ‎08-14-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved


akinsey206 wrote:

Hello,

 

I am in a very sticky situation.  I have been on my way to getting a USDA Guaranteed loan for my first house, and we were supposed to sign the final documents yesterday.  The loan underwriter said they need just a couple more things, one being an updated paycheck within 30 days of the loan date.  Here's the issue:

 

At the beginning of this month I received a salary raise at work, but I wasn't told about it until after the underwriting process.  When I was told about my pay raise, it never crossed my mind that I might have gone over the USDA income limit.  After sending my updated paycheck to the Loan Underwriter showing the update salary amount yesterday, it hit me, I was now over the USDA limit!

 

I brought up this fact with my agent and we brought it up to the lenders.  No one is sure what to do!  Today, the lender representative said to just use my paycheck from August 31, which would still show my salary before the raise, and would meet the condition of being within 30 days of the loan date.  However, my agents and the selling agent have said that this would still be considered fraud...  In my mind, if the lender has given the go ahead, I feel like we should be able to go ahead.

 

So, my question is, would it really be that bad for me to comply with the lender's suggestion and just sign the documents with an old paycheck of mine?  What are the chances of this coming back to haunt me?

 

-Anthony


 

I wouldn't sign the documents with an old paycheck of yours.  It definitely would be fraud, especially because you purposely gave them an old paycheck so that they wouldn't see your new income, which you know is over the legal limit.  However, fraud or not, If I were in this situation I would want to do the honest thing.  I'm not saying to abandon the whole process, but being completely transparent (as you have been here) with the lender and give them the new paycheck. 

 

If in the future your income comes into question, there is paperwork proving you received the raise prior to signing the paperwork.  There will also be paperwork showing that you used a pre-raise paycheck, suggesting that you purposely defrauded the USDA.  There is no way for you to prove that you were not informed about your raise or that the lender "suggested" that you use an old pay check.  The lender will deny suggesting you commit fraud and you will be stuck with all the evidence pointing against you. 

 

On the other hand, there's a possibility nothing will happen and you'll get away with it :smileyhappy:

 

Personally I wouldn't want to do it.

 

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New Member
akinsey206
Posts: 5
Registered: ‎06-27-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved

But the Lender Representative was the one who gave the go ahead to use the older check already, so I doubt they will do any additional calling or underwriting.  Right now, it seems like the only thing holding us back is the ethical standards of the agents and myself.  My ethics are wearing thin though... I really want to finally get into the house! :smileytongue:

 

After the loan closes, why would the USDA ever have a reason to come and investigate you?

 

-Anthony

Regular Contributor
tjmmp56
Posts: 197
Registered: ‎03-14-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved

If you can't use past income that hasn't been consistent for X amount time to qualify for a loan, doesn't seem right to exclude you based on a RECENT pay raise. 


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Valued Contributor
ptr2593
Posts: 1,486
Registered: ‎08-14-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved


akinsey206 wrote:

But the Lender Representative was the one who gave the go ahead to use the older check already, so I doubt they will do any additional calling or underwriting.  Right now, it seems like the only thing holding us back is the ethical standards of the agents and myself.  My ethics are wearing thin though... I really want to finally get into the house! :smileytongue:

 

After the loan closes, why would the USDA ever have a reason to come and investigate you?

 

-Anthony


 

In my opinion, speculating and saying you won't get caught as long as this-or-that doesn't happen that you won't get caught is very dangerous. 

 


 

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New Member
akinsey206
Posts: 5
Registered: ‎06-27-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved

Thanks everyone, I appreciate your responses.

 

I just got word from the underwriter and we found that the Lender Representative was just trying to push the deal closed, and hadn't even fully informed the underwriter.  Once the underwriter had the full picture, they spoke with USDA and they were told to deny the application.

 

However, we found a workaround: My fiance is pregnant and our baby is due in a couple weeks!  Once the baby is born, I actually receive an income credit from the USDA, and the credit is enough to push me back below the income limit.

 

So, for now we are going to try and rent the house from the seller for a month, and as soon as the baby is born, we can sign the paperwork!  I'm glad we are going to be able to move forward without having to do anything sketchy.

 

On the other hand, now I am going to be affected by the USDA's new rates that go into affect in October!  But hopefully I can float down my interest rate to make up for it.. :smileyhappy:

 

-Anthony

Valued Contributor
ptr2593
Posts: 1,486
Registered: ‎08-14-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved


tjmmp56 wrote:

If you can't use past income that hasn't been consistent for X amount time to qualify for a loan, doesn't seem right to exclude you based on a RECENT pay raise. 


The loan is for people with a certain income, not for people who used to have that income. 

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Valued Contributor
ptr2593
Posts: 1,486
Registered: ‎08-14-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved


akinsey206 wrote:

Thanks everyone, I appreciate your responses.

 

I just got word from the underwriter and we found that the Lender Representative was just trying to push the deal closed, and hadn't even fully informed the underwriter.  Once the underwriter had the full picture, they spoke with USDA and they were told to deny the application.

 

However, we found a workaround: My fiance is pregnant and our baby is due in a couple weeks!  Once the baby is born, I actually receive an income credit from the USDA, and the credit is enough to push me back below the income limit.

 

So, for now we are going to try and rent the house from the seller for a month, and as soon as the baby is born, we can sign the paperwork!  I'm glad we are going to be able to move forward without having to do anything sketchy.

 

On the other hand, now I am going to be affected by the USDA's new rates that go into affect in October!  But hopefully I can float down my interest rate to make up for it.. :smileyhappy:

 

-Anthony


 

Congrats!  And congrats on the baby too :smileyhappy:

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Regular Contributor
tjmmp56
Posts: 197
Registered: ‎03-14-2011
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Re: Recent salary raise pushed me past USDA Guaranteed income limit, after being approved


ptr2593 wrote:

tjmmp56 wrote:

If you can't use past income that hasn't been consistent for X amount time to qualify for a loan, doesn't seem right to exclude you based on a RECENT pay raise. 


The loan is for people with a certain income, not for people who used to have that income. 


My point was when qualifying for a loan, if you state your income is $2000/month you have to have verifiable proof of that income for a certain amount of time.  Maybe that's different with USDA, I personally have never gone through or even looked at the USDA qual's.  My point was just that to qualify you have to prove your income for a certain amount of time and that is seems unfair to be denied a loan because of a RECENT raise. 

 

But definite congrats to the OP!  I'm sure it'll all work out. 


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