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Hi guys,
(Dont know the proper terms but hopefully I will chime in.)
My wife and I had foreclosure on a VA loan that was redeemed in 10/09/09. For the past 2 years we have never been late, opened a couple lines of credit and learned as much as we could about the process. Currently, we are in the market again and will use the remainder of my VA entitlement for our next purchase. My loan officer ran an Automated Underwriting report on yesterday and noticed that the foreclosure did not show up. She stated according to the VA guidelines this would require a Manual underwriting which would require a 3 year waiting period. It is reporting on the credit report not not the AU report. Can anyone explain or help to rectify this issue. I truly thank you in advance for your response.
VA just requires a 2-year from foreclosure, so you should be OK as long as you've re-established credit since the foreclosure, no late payments/new negative credit since the foreclosure, and your total debt ratio is no more than 41%.
Manual underwriting is where they cannot use the aid of automated underwriting to approve you - so the human being underwriter checks everything against VA guidelines rather than just confirming the information that was put into the automated underwriting system.
Since your loan officer is saying that VA requires a 3-year wait, you should call them on that, as it is FHA that requires a 3-year wait (perhaps your loan officer got them confused). If they say they can't get you approved because of this situation/foreclosure hasn't been 3-years old yet then you should move on as most lenders are fine with a foreclosure at 2 years for VA financing.