topic Re: Loan In Underwriting...Losing my Mind in Mortgage Loans

Loan In Underwriting...Losing my Mind

Anonymous — Fri, 17 Aug 2012 17:26:55 GMT

I am trying to buy a house with my husband. We have applied for a loan program that is an FHA loan, but the down payment is financed into another loan (I think it might be part of a housing initiative in the state we live in, but I'm not sure). We are hoping to buy a small single family home, or a townhome in the $125k-$145k range.

The loan requirements were a 620 minimum socre, income of less than $81k, and the home has to be less than $250k.

We both have mid scores of about 650. However, my husband had several collections and two judgements about 5 years ago. All have been paid/satisfied. He also had about 18 months of consistantly late auto payments, the last late payment was March 2011. We were paying the payment each month, but because it was two months behind they kept counting the payment we made as the most past due payment. The car was paid off, and we paid the entire loan amount as well as all of the late fees that were charged. I had a couple of 30 day lates on credit cards but the newest one was over 2.5 years ago. I do have 3 auto loans on my credit history that are all spotless, and several credit card accounts with perfect records as well. We have also been renting for almost 4 years and have never been late on rent. I have been at my job for 8 years. My husband has been at his for 1, but he switched jobs to make more money, and still works for his previous employer part time.

We have a combined income of about $50k. Our debt obligations (not including housing) come to about $450, and our credit card utlization is at about 23%.

Our LO had us fill out a letter of explanation about the credit problems. The collections/judgements for my husband were medical bills that he accumlated at once because of a health problem that required surgery when he had no health insurance. My last credit card payments correspond to the time we were paying off the judgements and money was tight. The auto loan lates came about because we had given the car to my husbands parents and they had agreed to take over the payments. They told us they had paid February and March 2009, when they actually hadn't. We started making the payments in April 2009, but we did not have the funds to catch up the missing two payments at the time (making that arrangement with them was stupid, we know that now). My husband has a credit card that went to collections. It was in his name, but his mom took it out without his knowledge when he was 19, maxed it out and then stopped paying the payment because she was filing bankruptcy and thought she could include it on her bankruptcy because my FIL and husband have the same first and last name (but they don't have the same SSN, duh!) We do have the proof that she took the credit card out illegally, but my husband will not go forward with a fraud investigation because it's his mom.

Do you think we have a shot at being approved? I am going completely crazy. We were supposed to hear back by today, but our LO just let us know that the underwriter hasn't reviewed our loan yet, and that there a couple in front of us, so she thinks they will look at it today but we may not get a decision until Monday and I don't know how I will make it through the weekend. I feel so pessimistic and slightly annoyed at my husband for his past mistakes and also REALLY annoyed at my MIL and FIL for screwing up our lives.

Re: Loan In Underwriting...Losing my Mind

Anonymous — Fri, 17 Aug 2012 18:11:19 GMT

Its honestly hard to say how the lender will percieve the lates. The fact that they are over 1 year old you should be fine though. Your DTI looks like it would be in line and your scores are good enough for the program. Let us know how it goes!

Re: Loan In Underwriting...Losing my Mind

Booner72 — Sat, 18 Aug 2012 01:02:41 GMT

I know it sounds like too much to overcome, but I think you guys will be fine.

Re: Loan In Underwriting...Losing my Mind

Anonymous — Mon, 20 Aug 2012 14:22:49 GMT

Thank you. We are supposed to hear back today. The LOs we are working with are kind of a team, we have been working mostly with one, and she is out of the office today, and said that she would tell the other to make sure he gets back to us if he hears anything, but he is not as prompt with follow up, so I am trying not to get too set on hearing back today. I still am feeling pretty pessimistic. On one hand after posting this I have read that FHA mostly cares about the last 12 months of credit history, and that year is clean for both of us. I have 3 almost clean years (One 30 day late in Jan 2010), but I am still extremely worried about my husband's past credit history. He only has one open line of credit now, and it is pretty new. He is an AU on several of my accounts, but I know that in general underwriters will not take those into consideration.

Also, is it odd that we were sent to underwriting to get a preapproval? Our LO said that he wasn't able to get us through automated approval because my husband had two judgements in 2008 and they were throwing up a flag in the system, as well as the late auto payments. But that since we had the score and those were mostly old he thought he could bypass the automated and get it through manual underwriting. He did say he couldn't guarantee that it would be approved but that he would do everything he could. They seemed very thourough about getting documents (bank statements, pay stubs, W-2s, tax returns, verification from our employers and landlord) so it seems legit, right?

If we do somehow make it through do you think that we will have to go through underwriting again to get our loan closed? This is all just so stressful and we really HATE our living situation now. We moved into a cheaper place and are jointly leasing a house with some family to save money and pay down debt so we could get into our own home. We have been MISERABLE living there for the last year and really working our butts off for this, and if we don't get it I will be devastated. Sorry for the long reply, I just want this so much. We have been married for 4.5 years and have been through hell for most of it, and it really feels like we will never catch a break. I NEED something to work out for once.

Re: Loan In Underwriting...Losing my Mind

Anonymous — Mon, 20 Aug 2012 14:41:51 GMT

I hope it works out! Yes you will have to go through underwritting again for the actually loan however it should be a simpler process once you get a full pre approval. Hang in there!

Re: Loan In Underwriting...Losing my Mind

Anonymous — Mon, 20 Aug 2012 19:28:18 GMT

I am sending good thoughts your way that it will all work out. Keep the faith and keep on keeping on!!!!

I feel your pain and I haven't even entered into the loan process yet; every time I think about it I get knots in my stomach.

Re: Loan In Underwriting...Losing my Mind

Anonymous — Tue, 21 Aug 2012 06:07:47 GMT

Best of luck Mikki!! Hang in there, I am in the same boat as you right now...been in underwriting for over a week now.

Re: Loan In Underwriting...Losing my Mind

StartingOver10 — Tue, 21 Aug 2012 12:07:55 GMT

You mention that your husband has two judgments. Are the judgments paid or unpaid?

If they are unpaid they will need to be paid prior to closing. Judgments are not treated the same a collections. Judgments last for 10 years in some states and 20 years in other states. Most juridictions have the ability to renew the judgment too (under certain conditions). You will need to check your statutes to see what applies in your area. Also, judgments "attach" to the property when you buy and come in front of the mortgage. It will cloud the title of whatever you are buying. That is why the lender will require you to pay off any outstanding judgments. Naturally if they are paid, you won't have an issue with the judgment.

Pull up your husband's public record to see how the judgments read - if they show as paid a Satisfaction will be recorded.

Re: Loan In Underwriting...Losing my Mind

Anonymous — Tue, 21 Aug 2012 13:58:10 GMT

Thank you for the info. I did know that judgements had to be taken care of prior to closing, but it was not a factor for us. The judgements have been satisfied since Feb of 2009.

We got our approval yesterday (yeah!!), but I am having a hard time believing that it is really happening. Like I mentioned before,e LO we are using has an assistant who is also a LO and we have worked more with the assistant. She was going to be out of the office yesterday, so she told us her boss would be following up with us. He basically just let us know that we were approved and that we were approved up to the max budget we had set for ourselves. But I have 1 million quesitons, I sent him an email letting him know we have a lot to ask, and that we need a step by step about what happens next, and I am assuming he will have his assistant get back with us, since she has been working with us for the last few weeks. We have one condition, and that is that we have to have one account that was in dispute on my husbands report resolved, but we have already resolved it with them, so we should be good.

I am too nervous to even call our real estate agent to set up some showings because I still feel like this could all be a mistake and we aren't actually approved. I have been bracing myself for bad news and feeling so pessimistic that I can't believe the good news!!