topic Re: Possible FHA tightening casualty in Mortgage Loans

Possible FHA tightening casualty-UPDATE

XAVIERSMAMA — Mon, 14 Dec 2009 15:36:48 GMT

I am 2 years post BK, with a 648 mid score, no lates since discharge and no open collections and I can't find a lender What is going on?

Message Edited by XAVIERSMAMA on 12-14-2009 07:35 A

Message Edited by XAVIERSMAMA on 12-14-2009 07:36 AM

Re: Possible FHA tightening casualty

Jazzzy — Tue, 01 Dec 2009 21:21:26 GMT

What reasons are they giving you for denial?

Re: Possible FHA tightening casualty

Anonymous — Tue, 01 Dec 2009 21:24:04 GMT

Although I know FHA minimum is 2 years, I have heard some lenders are requiring 3 years. On top of that, alot of lenders are moving to 640 and 660 minimum scores. Have you re-established credit since BK? How many tradelines? Was there a mortgage lost in the BK?

Anytime you have a BK or foreclosure in the past (especially just 2 years old), just hitting the minimums may not cut it. Do you have some strong reserves? Was there a legitimate reason for the BK? How much are you putting down? Do you have some credit card balances you could pay down to get the score up a bit more?

Message Edited by mickie08 on 12-01-2009 01:24 PM

Re: Possible FHA tightening casualty

XAVIERSMAMA — Tue, 01 Dec 2009 21:23:53 GMT

I haven't even gotten to the application process, I've just been getting the stock "you have to wait 36 months after discharge date."

Re: Possible FHA tightening casualty

XAVIERSMAMA — Tue, 01 Dec 2009 21:31:30 GMT

I didn't have a foreclosure in the BK. Since BK I have my auto loan, student loan, a mastercard and a walmart card all with a perfect history since 6 months prior to my BK filing. I have $4500 in savings after I put in my 1% towards the purchase price, and I qualify for local down payment assistance in my area, so only the 1% of the purchase price and miscellaneous expenses would I be responsible for, i.e. home inspections, appraisal fees etc. I've been playing around with my CC balances and my scores are no different if I carry 10% or 1% so no where to really move there. I'm going to keep looking, but it's frustrating. Nothing will change within a year for me credit wise except for the passage of time. Even the FICO simulator doesn't give me any extra points for having another 12 months of ontime payments.

Re: Possible FHA tightening casualty

Anonymous — Tue, 01 Dec 2009 21:58:20 GMT

I think the 3 year post BK is going to become alot more common. Also, alot of times with BK in recent history, they are going to be very leary of a buyer using a down payment program and putting that little of their own cash into the deal.

Re: Possible FHA tightening casualty

XAVIERSMAMA — Tue, 01 Dec 2009 22:10:08 GMT

As usual I seem to get caught in a catch 22. I thought the whole point of FHA was to make mortgages available without having to come up with a large down payment. If I use the DP assistance, it's frowned upon because it's not my money. If I don't use the DP assistance and put a larger down payment using my own funds, it brings my reserves down from 4-6 months to 2-3 months which is also frowned upon.

Re: Possible FHA tightening casualty

Anonymous — Thu, 03 Dec 2009 21:10:59 GMT

@XAVIERSMAMA wrote:
As usual I seem to get caught in a catch 22. I thought the whole point of FHA was to make mortgages available without having to come up with a large down payment. If I use the DP assistance, it's frowned upon because it's not my money. If I don't use the DP assistance and put a larger down payment using my own funds, it brings my reserves down from 4-6 months to 2-3 months which is also frowned upon.

The problem you could be running into is that banks don't frown on dp assistance they frown on people only using it for their downpayment and not saving their own money. I understand you have reserves but in the banks mind who's to say those arn't your reserves just money to say buy a new car after you close.

I used dp assistance grants myself when I bought my house. I had scores at around 780 for all 3 and this was before the credit crunching/mortgage mess. I also had good amount of reserves even though the conventional loan program I did didn't require any and I was still required to put down 3% of my own funds to close even though the assistance alone was around 12-14% and I got seller concessions as well. Most banks/brokers dont frown on having 2/3 months reserves its most likely the bk being only 2 years old

Re: Possible FHA tightening casualty

Anonymous — Thu, 03 Dec 2009 21:19:52 GMT

no matter the situation, when you are using a DP program and not putting much money into the equation, lenders are leary. When you add in a BK 24 months ago there is plenty of reason for them to question it.

BTW, FHA's job is to make loans to people have issue swith down payment but have shown the credit worthiness to be able to buy and upkeep a house, not to make risky loans. Nothing personal as I don't know you and am not judging you at all....but historically, lending to someone with a BK in recent history and minimal down payment invested into the house is a very risky loan that has a much higher chance of default. The lenders see that and are very leary of loaning money to that profile. Again, not trying to get personal, just clarifying what FHA's role is.

Re: Possible FHA tightening casualty

XAVIERSMAMA — Thu, 03 Dec 2009 21:42:20 GMT

No offense taken. FHA doesn't consider me risky. FHA only requires 3.5% down and 24 months clean post BK history, so I do qualify under FHA, it's the lenders that I have a problem with.

Re: Possible FHA tightening casualty

DallasLoanGuy — Thu, 03 Dec 2009 22:18:45 GMT

Who are you calling?

Have you tried a broker or banker? Or just banks?

Re: Possible FHA tightening casualty

XAVIERSMAMA — Thu, 03 Dec 2009 22:23:44 GMT

right now I'm going through the banks that are approved from a particular DP assistance program I want to use. This one is a grant that doesn't need to be repaid that's $10000. I qualify for other programs that are no interest loans, so I will exhaust all my options with the first DP program,and then if I don't find anything I will move to a broker. I might just be trying to have my cake and eat it too. I'm sure my file will qualify me for an affordable loan somewhere. I'll keep you posted.

Re: Possible FHA tightening casualty

Anonymous — Thu, 03 Dec 2009 22:33:56 GMT

By FHA, I meant the lenders your have been applying for as far as looking at the file as risky. As said, statistically it is a risky file.

That said, have you doublechecked that the down payment program is not the reason you are having issues getting an approval. I looed into similiar programs out here in CA and the restrictions that the progrma held to the lenders were higher than FHA minimums and they also had their own underwriting that had to approve the file as well.

Re: Possible FHA tightening casualty

XAVIERSMAMA — Thu, 03 Dec 2009 22:41:17 GMT

I'll do some investigating and see but I don't think so, the people I've dealt with so far haven't even looked at my file. I have my clear to purchase certificate from my DP program that shows I've taken the required money/credit mgt courses they require, they only send you to the lenders after you have already met their requirements, so I'll just have to wait and see. I still have a few more lenders on the list, I think if someone would actually look at my info in totality with the BK they would see that I'm not super risky, unfortunately it seems like lenders don't look at actual files anymore they look at charts and statitistics.

Re: Possible FHA tightening casualty

Anonymous — Thu, 03 Dec 2009 22:53:41 GMT

actually it is the opposite. They used to not look that much at the file as long as you fit certain guidelines (i.e 24 months post BK).

Now they look at every nook and cranny. This is why DP programs are alot harder to use than they use to be. They are interested in not only FICO and recent credit history, but how much of YOUR cash is going into the home, etc. It used to be you could even use seller funded DP and not put a penny into the purchase. But now the banks look at every file and every items.

It's more like now adays, they are looking for reasons that they should deny loans verses in the past where they looked for reason to approve. It is a pain, but given the current financial situation and the meltdown that just occurred it is hard to blame banks for getting picky.

Re: Possible FHA tightening casualty

Lel — Thu, 03 Dec 2009 23:14:02 GMT

XAVIERSMAMA wrote:
No offense taken. FHA doesn't consider me risky. FHA only requires 3.5% down and 24 months clean post BK history, so I do qualify under FHA, it's the lenders that I have a problem with.

Remember, these are minimum requirements for qualification from the FHA. It's kind of like looking at the minimum standards for getting into college - just because you have a B average and SAT scores of 1000 doesn't guarantee admission, regardless of what the application form says.

The lenders are under close scrutiny to make sure that borrowers can be reasonably expected to make good on their loans. They establish their own guidelines for approval which involve more detail than looking at credit scores and down payment amount.

It appears that you've got your act together, but standards have simply gotten more strict. You might want to consider working with a knowledgable broker who is familiar with your DP assistance program; he/she might know of additional lenders from which you could theoretically get a mortgage. It could save you the time of going to the banks individually.

Re: Possible FHA tightening casualty

Anonymous — Fri, 04 Dec 2009 20:58:48 GMT

I am also at my 2 years post BK and I am pre-approved by Wellsfargo and another mortgage company just recently. I went directly to my bank (Wachovia) and personally speak to the loan officer and gave all the information he needed and check my credit/ though my mid credit score is 609. He said that the FHA/ freddie Mac /Fannie Mae requires a minimun score of 600 so I guessed I pass that requirement and was pre-approved for $180K. He gave me the pre-approval letter. He said with bk the under writer might ask for the discharged paper but other than that he congratulate me and said I am a Priority Buyer and can go house shopping? So am in good direction? I am still worried.

Re: Possible FHA tightening casualty

Anonymous — Mon, 07 Dec 2009 21:56:09 GMT

Like many things it depends on the state you are in and the programs that are offered in your state or locality. I was recently approved for a FHA loan in NJ with a mid score of 617! I go to closing on December 10th! During the process I was approved by the bank with no conditions (I used a broker) and then forwarded to the state to be reviewed. Well the state came back and did not approve my loan! But my broker went back with the condition to pay off a small student loan $7000 and they approved it. While going through the process, my broker told me that FHA had changed some of their guidelines and that is why I had to do what I had to do. So things are constantly changing. More people are defaulting on their mortgages and these institutions are responsible for making sure they are lending out the money as responsibly as they can based on the information they have.

Re: Possible FHA tightening casualty-UPDATE

XAVIERSMAMA — Mon, 14 Dec 2009 15:37:20 GMT

Hello everyone.

Found a lender $140000 4.5% FHA 30 year fixed. Now the hard part... finding a house and closing the deal!

EX 676 TU 649 EQ 648

Re: Possible FHA tightening casualty-UPDATE

Anonymous — Mon, 14 Dec 2009 15:54:58 GMT

How are you getting a rate of 4.5%? Is that with points?