Credit questions / help to get pre-approved for mortgage

[Anonymous]

We applied for a pre-approval today for an FHA loan.  We had no idea how much lower our score would be then what credit karma had reported.  My husbands median score was 587.  The LO marked the things that were lowering our credit.  There were some collection accounts (four of them), but have recently been paid off.  They are not showing up as paid yet.  The biggie is several student loan accounts which showed up to 90 days past due.  My husband had filed a forebearance due to medical issues with one of our children and it did not cover the loans that are currently showing up as a default.  Is there any hope at all for us to get a pre-approval in the next few months?  Our income is high and all our credit cards are paid off.  I'm so lost... I've read so many threads on here, but I'm still confused.  A little guidance would be helpful.

[Anonymous]

CK scores are essentially worthless.  I don't think you can get approved with the defaulted student loans on his report.  If they are federal loans he can try to rehab them, but that can take up to a year to properly reflect on his credit report.  Can you qualify on your own with your income?

[alienfico]

I'm sorry to hear about your situation.  Maybe one of the mortgage experts such as Shane can help you up in mortgages.  I always thought that FHA loans would 

allow someone to qualify even with a 580 score....but no recent lates, at least not within 24 months prior to applyiing for a home loan.  How recent are your husband's lates?

[Anonymous]

I would not be able to get the mortgage on my own since I stay at home with our kids and have no credit and no income.  My husbands student loans that defaulted were not government loans, they were private.  He tried to defer all his loans and did not realize he couldn't get the deferment on his private loans... unfortunately too late because the last payment that is showing late was fairly recent... within the last 4 months.  We are up to date, have $24,000 in our savings, no credit card debt, and all collections that were small medical bills he was not aware of have all been paid now.  Should I write a letter to get the paid collections off our report? 

We have never been late on a rent payment which is $1600 per month, never been late on car payments or credit cards.  It just seems like one little mistake is costing us our home that we desperately need mostly for space for our three kids and therapy rooms for our two kids with severe autism.

My husbands income level - $120,000 base with bonuses and we can't get a loan.  We had a major medical situation come up with out older disabled son which is why we were requesting a deferment since we had a lot of travel, etc during that time.

Is there any way to talk to the LO and explain things in detail?  He emailed us yesterday pointing out all that was wrong and that no mortgage lender would touch us, but felt confident we could repair within 4-6 months.  We are trying to do a new build home which will not be completed until March/April 2016.  We needed a preapproval letter now showing we could be preapproved, but that seems impossible now.

Sorry for venting... I just feel so lost and confused by all this.  I don't know what steps need to be taken to rectify the situation.  I know my husband plans on sending a goodwill letter to Navient (student loans), but I'm not sure what to do with the paid collections that are still hurting our score according to the loan officer (they didn't show paid when he pulled our credit).

[StartingOver10]

Very first thing you need to do is pull your own credit reports (all three) at www.annualcreditreport.com so you can see exactly what is reporting and the dates of default.

Second, just so you know, you can get your mortgage scores here on the 3B report. That will be helpful to you as you go through this rebuilding process.

Yes, send GW letters to get rid of the paid collections. If the medical is unpaid, then go through the HIPPA method. You will need to google it as we can't discuss it here.

As to the student loans, what is the actual status now? Are you caught up or are they still in deferment?  Taking care of the student loans is critical to you getting an approval.

You won't be able to get approved for any mortgage with a late payment within the last 12 months, most especially studen loan lates. FHA will go down to 580 (even 500) but you have to have a larger downpayment (min 10%) and not all lenders will do those type of loans even though FHA will insure them - because those loans are super risky. Each mortgage lender has their own overlays of criteria over the minimum required by FHA. It varies from lender to lender.

How much does your husband owe in student loans? Do you have the ability to consider a payoff of the student loans with late pays? That will solve the immediate issue.

[Anonymous]

The student loans are currently up to date.  This is how our private student loans show on our credit report:  August - 60 days, September - 90 days, Oct - Dec is showing as 120 plus late.  All of these lates are during the deferment period requested which was granted, but only on my husbands government loans.  I'm not sure what we should do.  My husband is going to try calling Navient and asking if he paid off two of the loans... could they remove the lates since it was a misunderstanding.  Since all loans are through Navient... my husband didn't realize that the private loans were late... he thought they were deferred.  I'm worried about whether that will make things worse or better.  Does anyone have any recommendations?  The loans are now showing up to date.  This is the only lates we have in his entire history of student loans which has been a while, credit cards, cars, etc.

My husband currently owes $13,292 broke into three different loans.  We could do two, but not the largest one which is a little over $7,000.  We could do it actually, but it will really lower our savings which we wanted to keep to buy the house.

[Anonymous]

I'm sorry you are expeiencing such a PIA difficulty. Student Loans seem to be particularly difficult to deal with. I don't know if they fall under this, but if you received no bills whatsoever for the period they are reporting you late, it could potentially be a violation of the Fair Credit Billing Act (FCBA). I'm not really very familiar with it, but a google search would help you out with researching it. If they do fall under it, it could be leverage against Navient to get them to remove the lates. 

[Anonymous]

*Edit - Didn't realize that all debts were up to date.  You should try to GW the lates off.  Otherwise you're going to have to wait until you haven't had a late in the last year.  BTW, those 90+ day lates are absoutely KILLING his your score.  Even by waiting a year he may not qualify with them on there.

[Anonymous]

Great news!  My husband called Navient this morning and explained the situation.  Since he has always had a good payment record with them they told him to send in a goodwill letter and overnight it to the person he talked to.  They said they will try and get it removed from his reports before April 1st.  I'm so happy, but will feel the most relieved when I see the credit report changes. :-)  A big victory for us.  It looks like this mortgage thing might work out afterall.

We have a few small accounts that have been paid still showing as collections.  I have all my goodwill letters ready to go out in todays mail.  Wish me luck.