topic Re: Help with FHA loan in underwriting in Mortgage Loans

Help with FHA loan in underwriting

Salukis — Fri, 14 May 2010 04:25:06 GMT

Here is the background:

My wife is graduating from medical school so we are moving to Indianapolis for her residency. She has a 3 year contract that will start at 47,500 and will go up each year.

I have a job which pays 39,000 in Illinois and will start June 14 with the state of Indiana making 32,000.

Our credit scores avg 750 or higher as I spent a year utilizing this board to improve my dilapidated college credit.

Our first realtor recommended that we go with a Mortgage Broker from Access National Bank. He assured us that he could use her contract as proof of income in lieu of paycheck stubs. He stated that we could not use my income because it was in a different state. (I just recently found out I got the job with the State of Indiana).

We were pre-approved and found a house for 123,500 and we are going through FHA because we only could put down 3.5%. The good faith estimate gave us a rate of 5.25%. He assured us the whole time that everything looked good and we had a strong file. Our debt to income ratio was fine. We have set a May 28th closing.

We found out today that our loan had been approved in underwriting; however, they wanted my wife to produce pay check stubs. This is impossible because she will not start until June 17th. Essentially, this means we are not approved. Also this week I found out I had the job with the SOI, and he will add me to the application. However, I fear we will have the same problem because I will also not have any paycheck stubs from the new job.

He said that he has appealed to the vice president of the bank and is asking for an exception. He stated that the underwriter is following the rules closely and that as he interprets the guidelines, we should be able to be approved based on projected income.

He has been very professional and helpful and has been in the business for 17 years. It just seems like he knew about our lack of pay check stub situation a long time ago and did not address it. He kept reassuring us he could make it work.

We our now a little over two weeks away from closing and things are still up in the air. We don't know if it is to late to start looking at other mortgage options. We were also pre-approved by Chase bank but have not even begun the application. Our realtor advised us we should corner him and demand an up or down answer by tomorrow and that it usually takes about a month to process a loan so we would be cutting it close.

Could someone with experience in FHA loans please interpret this situation for us and advise us what to do next. Thanks!

Re: Help with FHA loan in underwriting

Salukis — Fri, 14 May 2010 14:17:36 GMT

Are pay check stubs a must guideline for FHA loans?

Re: Help with FHA loan in underwriting

Anonymous — Fri, 14 May 2010 14:19:12 GMT

@Salukis wrote:
Are pay check stubs a must guideline for FHA loans?

Absolutely

Re: Help with FHA loan in underwriting

Salukis — Fri, 14 May 2010 15:34:07 GMT

Our broker said the vice pres can do an exception for pay check stubs with contracts. If anyone could please read our scenario and let us know what they think that would be greatly appreciated.

Re: Help with FHA loan in underwriting

DallasLoanGuy — Fri, 14 May 2010 19:01:41 GMT

@Salukis wrote:
Our broker said the vice pres can do an exception for pay check stubs with contracts. If anyone could please read our scenario and let us know what they think that would be greatly appreciated.

VP can, but have they?

Re: Help with FHA loan in underwriting

Salukis — Fri, 14 May 2010 22:54:50 GMT

Dallas. Great to hear from you!! The vp has sent the file to the lender for approval. The broker says he feels confident that we have a strong file and he is confident. Fha guidelines say that as long as you have a non-revocabale contract It is acceptable. I am very confused at his point. The buck keeps getting passed. Dallas or any others can you please explain what is happening? Thanks

Re: Help with FHA loan in underwriting

Salukis — Tue, 18 May 2010 02:24:24 GMT

Does anyone have any ideas..Suggestion?

Re: Help with FHA loan in underwriting

ShanetheMortgageMan — Sat, 22 May 2010 21:40:41 GMT

FHA permits you to use projected income with a non-revocable contract, however many lenders have overlay guidelines that require a paycheck from the job with 30 days of pay prior to closing. Does your contract have non-revocable verbiage in it, or if not, will the human resource department at your new employer be willing to write something stating it is non-revocable?

Re: Help with FHA loan in underwriting

Anonymous — Wed, 02 Jun 2010 00:00:36 GMT

Good to see this discussion thread! Going through this exact situation right now. Money is in escrow, and I am suppose to close on June 18th. I work in education (teacher) and will be changing districts this year. I will start employment with my new district in August. Initially, the FHA lenders my LO sent my application to are saying they want 30 days proof of pay. Apparently USDA has similar guidelines. I will be receiving my new employer-approved contract this week. Hopefully we can find a lender that understands my situation and will accept my new contract.

It seems like poor underwriting if I can't qualify for a loan "because I haven't worked" in my new job yet--literally, I could quit my job after closing, too.

Any feedback is appreciated.

Re: Help with FHA loan in underwriting

ShanetheMortgageMan — Fri, 04 Jun 2010 23:30:42 GMT

You can only try by providing them a copy of the contract (hopefully it doesn't have any conditions of employment that haven't been met), and a copy of the FHA guidelines which point out that it's acceptable.

http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?address=4155-1.4.E.5.d

Projected income is acceptable for qualifying purposes for a borrower scheduled to start a new job within 60 days of loan closing if there is a guaranteed, non-revocable contract for employment.

The lender must verify that the borrower will have sufficient income or cash reserves to support the mortgage payment and any other obligations between loan closing and the start of employment. Examples of this type of scenario are teachers whose contracts begin with the new school year, or physicians beginning a residency after the loan closes fall under this category.

The loan is not eligible for endorsement if the loan closes more than 60 days before the borrower starts the new job. To be eligible for endorsement, the lender must obtain from the borrower a pay stub or other acceptable evidence indicating that he/she has started the new job.

Re: Help with FHA loan in underwriting

Anonymous — Sat, 05 Jun 2010 00:35:50 GMT

Thank you for the FHA Handbook link. I will certainly forward this on to the lender. Funny the handbook mentions teachers--we actually don't get our "official contract" until our first week of work in August. All I have right now is an offer letter with salary and proof that the school board approved my contract. Due to all the changing circumstances with the school budget, typically pay scales and benefits aren't determined until July. I hope my lender will understand the situation I am in! Chase and B of A already said they wanted 30 day pay stub. Investor overlays!