topic Re: Heading to level two underwriting... Thoughts? in Mortgage Loans

Heading to level two underwriting... Thoughts?

yepbob — Fri, 02 May 2014 21:31:27 GMT

We have applied for a FHA loan through the BTW program and wanted to be fully underwritten before house shopping. Our broker was positive we would be approved as she had been talking with the underwriters through the document process and finally submitted our file on April 8th. Just found out that the first underwriter denied us - not because of documentation or scores - but because we have too much newly established credit. Both my loan officer and myself are stunned. We did get new cards and all have zero balances minus a $300 balance on Walmart that I said I would be PIF this month and two capital one cards - one with $400 balance and one with $600 balance (one mine and one my husbands. Our DTI without a mortgage is 10% which includes those cards as well as two car payments and my student loans. We earn $115k combined per year and were applying for a $280k mortgage with $20k down payment.

Now I understand that we are in a unique situation with the BTW program - but out home was not involved and we are 15 mos out from a ch 7 bk discharge.

We have now been referred to the level two underwriter... Anyone had experience with a second level underwriter and what was the outcome? I'm guess it will be a no go but just looking for info...

Our mid scores were - me 662 and husband 643

Re: Heading to level two underwriting... Thoughts?

TimeToRecover — Fri, 02 May 2014 21:46:50 GMT

How new are the new cards. Did you get them last month, 6 months ago, or a year ago?

Re: Heading to level two underwriting... Thoughts?

yepbob — Fri, 02 May 2014 21:57:19 GMT

Cap 1 were the first cards when our bk was discharged so they turned 1 year in February... Walmart was in August 2013 ... NFCU LOC was January 2014 with zero balance

Re: Heading to level two underwriting... Thoughts?

CreditRookie22 — Fri, 02 May 2014 22:00:51 GMT

I pretty sure that all accts. have to be opened at least one year prior to applying for a mortgage. You're never suppose to apply or open accts. 1 year before a mortgage

Re: Heading to level two underwriting... Thoughts?

mtrsprt — Fri, 02 May 2014 22:03:21 GMT

Why not go conventional? Dealing with FHA loans can be a headache.

Re: Heading to level two underwriting... Thoughts?

yepbob — Fri, 02 May 2014 22:13:13 GMT

We have a bk discharged in Jan 2013 so cannot go conventional. Our mortgage broker said the new cards did not matter as we have had them to rebuild our credit after the discharge which the program specifically requires new established credit. She also indicated that she has not had anyone with that reason declined before and she has been in the area for a long time so I think she's a good loan person. I'm just wondering about level two And how that's different...

Re: Heading to level two underwriting... Thoughts?

yepbob — Fri, 02 May 2014 22:14:13 GMT

I should also add that she thinks we can still get approved at level two - but we are not so sure...

Re: Heading to level two underwriting... Thoughts?

mtrsprt — Fri, 02 May 2014 22:23:27 GMT

Maybe just waiting a little longer before purchasing would be another option.

Re: Heading to level two underwriting... Thoughts?

Revelate — Fri, 02 May 2014 22:29:57 GMT

@CreditRookie22 wrote:
I pretty sure that all accts. have to be opened at least one year prior to applying for a mortgage. You're never suppose to apply or open accts. 1 year before a mortgage

What they ran into may be lender specific. I don't know FHA well but I suspect that's an overlay.

In any event, 6 months is usually the recommended minimum, 12 months is better as any inquiry you've taken would've faded to grey (at a minimum) and every single tradeline would've hit a 1 year anniversary. That's a FICO optimum solution, but plenty of folks have gotten loans underwritten without being this squeaky clean.

Re: Heading to level two underwriting... Thoughts?

yepbob — Fri, 02 May 2014 22:32:13 GMT

I appreciate the advice to wait longer - and I will obviously if that is the case - however we have 3 kids in a tiny apt and school enrollment issues coming up - so although in a perfect world time would be of no consequence

However my question is really more specific to level two underwriting not really about waiting or not

Re: Heading to level two underwriting... Thoughts?

StartingOver10 — Sat, 03 May 2014 15:19:19 GMT

@yepbob wrote:
I appreciate the advice to wait longer - and I will obviously if that is the case - however we have 3 kids in a tiny apt and school enrollment issues coming up - so although in a perfect world time would be of no consequence

However my question is really more specific to level two underwriting not really about waiting or not

Level 2 underwriting has more experienced underwriters.

Having said that: it isn't possible to know what the u/w will say in your situation because the bank overlays for your specific lender are the issue here.

You can try your file with another lender, but we are jumping the gun until you hear back from your current lender. If your file is turned down, don't lose hope. Sometimes the lender tightens their criteria based on their own portfolio issues that have nothing to do with you specifically.

Re: Heading to level two underwriting... Thoughts?

yepbob — Sat, 03 May 2014 14:53:27 GMT

Thanks - that's exactly what I was kind of looking for. We aren't doing anything but waiting right now and I know we have some extra issues so not really too excited yet. Just wasn't sure what the level 2 meant... And our loan officer said there are 3 underwriter levels so we are going to level two and she thought it would still go through. We just thought maybe she was being over hopeful