topic Re: Refer With Caution in Mortgage Loans

Refer With Caution

Anonymous — Tue, 02 Oct 2018 18:23:48 GMT

All,

I'm not sure how I got into this position so i'm hoping someone could enlighten me on this.

The house we're buying is just south of $471k. Income is just shy of $115k. Middle Mortage FICO score is 682. I have no other debts other than a car payment of $324 and child support of $334 per month which isn't late nor showing on my CR. I can put upto $96k down. When they put the the loan in as an FHA it comes back approved...but not on conventional.

My backend DTI is just shy of 43%

I do have some 90 day lates from Sallie Mae from 2012 and they are disputed currently, though I just sent a letter to have those disputes removed. I've spoken with 4 mortgage brokers and ALL of them say the same thing. They're getting refer with caution but otherwise they credit profile looks great as they've all closed houses for more money, on worse credit with less money down. They've taken it to their credit policy managers and even yes...all 4 of those managers also don't understand why its being referred with caution. One of the banks is going to do a manual underwrite if after the disputes are removed it still comes back as refer with caution though i'm not holding my breath. So that said, has anyone ever had any luck calling Fannie Mae and/or Freddie Mac to find out what about the credit profile prevents them from wanting to extend credit?

Re: Refer With Caution

NC_Mtg_Loaner — Wed, 03 Oct 2018 01:06:48 GMT

What is the difference between the APRs of the FHA loan that you have an AUS approval for vs. the Conventional loan you are looking to purchase?

Re: Refer With Caution

Anonymous — Wed, 03 Oct 2018 01:11:38 GMT

4.75-5.5 on the FHA depending on the lender credit and lender and low 5's to low-mid 5's on the conventional.

Re: Refer With Caution

NC_Mtg_Loaner — Wed, 03 Oct 2018 01:24:59 GMT

so, if they are similar why not just go with the FHA loan?

Getting FNMA to make an exception doesn't seem like a realistic or feasible option, especially if time is of the essence.

Re: Refer With Caution

kc0039 — Wed, 03 Oct 2018 22:51:21 GMT

Have they tried 15% down? PMI will cover the rest. Use the rest of the money as reserves. Those disputes are what's killing your file with Fannie. Have they tried Freddie?

Re: Refer With Caution

Anonymous — Sat, 02 Mar 2019 21:04:26 GMT

Hi,
Could you tell me what happened with your loan situation? Wife and I are in the same position with 666 middle score only needed a 640, 1% credit util and DTI under 45%

Stumped and confused idk if it’s lender overlays that are causing the problem?

Loan officer is stating DU approved with a co borrower friend but would rather not go that route, we had that as an option when we were looking at higher priced homes but settled on a lower price home that would fit into her income of $109k yearly, purchase price of $540k, with 5% down and mcc credit that works out to about $450/mo.

This is frustrating since we paid about $7500 in unpaid charge offs to get wife’s score over 640.

Re: Refer With Caution

Anonymous — Sat, 02 Mar 2019 22:15:23 GMT

Sure

I put down 96k and did an FHA mortgage on my own which put me at the maximum loan amount for the house in our county. We closed on Nov 16th moved in on the same day. I don't plan on keeping the loan as I wanted to not escrow property taxes and insurance, plus I didn't want to pay $275 a month or so for insurance (PMI effectively) if I wasn't getting the benefit of it. That said i've only been in the house for 3 months and i'm going to wait another year or two before I refi it.

Good luck but in your instance you're going to need to increase the % down I think to get a conventional and not knowing where you live would make the determination for going FHA etc. for loan limits.

Re: Refer With Caution

zerofire — Sun, 10 Mar 2019 01:54:28 GMT

@Anonymous wrote:
All,

I'm not sure how I got into this position so i'm hoping someone could enlighten me on this.

The house we're buying is just south of $471k. Income is just shy of $115k. Middle Mortage FICO score is 682. I have no other debts other than a car payment of $324 and child support of $334 per month which isn't late nor showing on my CR. I can put upto $96k down. When they put the the loan in as an FHA it comes back approved...but not on conventional.

My backend DTI is just shy of 43%

I do have some 90 day lates from Sallie Mae from 2012 and they are disputed currently, though I just sent a letter to have those disputes removed. I've spoken with 4 mortgage brokers and ALL of them say the same thing. They're getting refer with caution but otherwise they credit profile looks great as they've all closed houses for more money, on worse credit with less money down. They've taken it to their credit policy managers and even yes...all 4 of those managers also don't understand why its being referred with caution. One of the banks is going to do a manual underwrite if after the disputes are removed it still comes back as refer with caution though i'm not holding my breath. So that said, has anyone ever had any luck calling Fannie Mae and/or Freddie Mac to find out what about the credit profile prevents them from wanting to extend credit?

I would think it has to do with the DTI. To put it mildly you have too much debt already. Now obviously your income is considered elevated so in a way the numbers are inflated. Lastly the disputed info may or may not be removed in a timely fashion so it might be still on your report. Any negative will break a conventional loan. Lastly the down payment might need to be increased especially to counter the massive amount of debt that you have.

Re: Refer With Caution

Anonymous — Mon, 11 Mar 2019 03:13:29 GMT

Actually, my debt load was a little over $650 a month, the back end DTI of 43% (hence total debt) had nothing to do with it either. Yes, its the maximum, but still acceptible. Funny though as FHA DTI is over 50%...*sigh*. The disputes actually came off, I wrote a letter and had a rapid rescore done and they were all dropped so it wasn't those either. The (2) 90 days late from 6 years ago meant nothing to them. The reason for the referral was a short credit file. I had been using zero credit for the last 15+ years (rented, bought everything in cash) so my average age of accounts was less than 2 years. Using CK and MyFICO its the one thing I have working to my detriment. It won't do me any good to close anything as it would only take off a few months.

Had I not refinanced my truck last year for a lower rate (same term) it would have helped some, but its almost paid off now so once it drops I can see my score dropping as I won't have an auto loan and my mix won't be as good. All I can do is keep paying my bills and wait another 4 years. I should be in the 760's by then I would imagine.

Re: Refer With Caution

zerofire — Wed, 20 Mar 2019 22:29:45 GMT

Since I do not see the report I had to take a guess. I assumed you had used credit for at least a decent amount of time before asking for a mortgage. A short credit file can make a conventional mortgage be considered on shaky footing. Also the DTI should be 35% or less for it to be considered stable. This is because of inflation and you do not want you to be thinking to pay for food or pay for the house. FHA has some calculated penalties in the DTI to counteract some kinds of credit habits. That is how they got >50% DTI on your 43%.

If you refinance a truck then you should have a new car loan to help with the mix. It might not have aged well but it still is going to be there. I hope you did not just go direct by interest rate but actually calculated that there would be a savings over the life of the new loan compared to the old one.