topic Re: Finally clear to close FHA in Mortgage Loans

Finally clear to close FHA

tooleman694 — Tue, 21 Aug 2012 19:59:58 GMT

Some back story to those who don't my story

I had FHA pre-approval and was buying with my wife as a non-purchasing spouse. My credit is good, hers is really bad. But my income is enough to cover all the bills.

Anyways I got denied thru FHA because of my Wifes credit while in underwriting. Was told in order to make it past underwriting id have to wait 7 months. About the time it takes to build a new home.

So we tried to put a contract on a new build with the same builder, and they didn't want to do it unless we can make it thru underwriting. So the file went back in and we are clear to close in March!!

So now we start the process all over again to build another home. It is a fun process so I really do not mind too much, plus this time around we got a better deal and the home is going to be cheaper.

We moved into a new place short term while the build takes place. finally.

Re: Finally clear to close FHA

Anonymous — Tue, 21 Aug 2012 20:03:05 GMT

Why would they deny you because of your wife's credit if she was not going to be on the mortgage? I am in the same situation as you. I will be the one purchasing because my husband's credit is worse than mine. I am new to the process and am about to submit for pre-approval but I've never heard of someone being denied for that. Does that happen often?

Re: Finally clear to close FHA

Anonymous — Tue, 21 Aug 2012 20:12:01 GMT

Tooleman I have followed your story and I pray this time around will be better! I look forward to seeing updates from you!

Re: Finally clear to close FHA

tooleman694 — Tue, 21 Aug 2012 21:59:20 GMT

From what I understand, if you purchase the home without your spouse they wont count their credit scores. But if they have things like a recent late payment, its like you have a recent late payment and they will not approve the loan.

Re: Finally clear to close FHA

Anonymous — Tue, 21 Aug 2012 22:24:44 GMT

hi everyone! I found this on FHAs website. If you live or purchase in a community property state, then they pull the credit report of the non-purchasing spouse. Ps...I have learned so much on here! Thank you everyone!

Do I have to count debts and credit for a non-purchasing spouse?

A credit report, which complies with HUD Handbook 4155.1, is required on a non-purchasing spouse residing in a community property state or when a property to be insured is located in a community property state.
A valid and reliable verified credit profile of the non-purchasing spouse must be established and their debts included in the borrower's ratio unless the lender can document, as regulated by state law, that the obligations may be excluded.
Although the non-purchasing spouse's credit history is not to be considered a reason for denial, it must be obtained in order to determine the debt-to-income ratio of the borrower.
If there is an indication or discrepancy regarding the non-purchasing spouse's social security number or credit status the lender, remains responsible to exhaust all possible means to resolve the issue through direct contact with the Social Security Administration, a service provider with direct access to the Social Security Administration and/or the credit reporting agency.
The spouse's release to order and receive a credit report must be obtained by the lender. If the non-purchasing spouse refuses to provide authorization for the credit report, the lender would be unable to establish the borrower's liabilities, thereby making the loan uninsurable if it is not closed in accordance to FHA's rules, regulations, policies, procedures, and guidelines.

Handbook 4155.1: 4.A.5.b-c

Re: Finally clear to close FHA

thankfulheart — Wed, 22 Aug 2012 06:04:21 GMT

@tooleman694 wrote:
So we tried to put a contract on a new build with the same builder, and they didn't want to do it unless we can make it thru underwriting. So the file went back in and we are clear to close in March!!

Wow. I didn't know they would do a "clear to close" that far in advance. My house is supposed to be done in October and I'm still not finished with underwriting (my conditions are going back in this week to see if they have anymore). They will also be pulling credit one more time as the reports are only good for 90 days and have said they will need more paystubs, bank statements, and copies of rent checks. They will not clear for closing until all the ducks are freshly lined up in a row.

Re: Finally clear to close FHA

JusdoNit — Wed, 22 Aug 2012 13:43:32 GMT

Congrats. Glad to have read they are working with you to make it happen.

Re: Finally clear to close FHA

tooleman694 — Wed, 22 Aug 2012 14:07:27 GMT

My file will have to go back to underwriting in March, but it will be just a formality as long as my credit and income still checks out.

Re: Finally clear to close FHA

Anonymous — Wed, 22 Aug 2012 21:00:55 GMT

My situation is somewhat similar. We were trying to do a FHA streamline refi removing a coborrower. This process started back in Feb but is finally scheduled to close on Friday. It's been a long journey that when I started many professionals said couldn't be done. But a combination of my research, patience, and working with some really good people has brought it to fruition.