AUS for pre-approval letter? UPDATE Probably won't close :-(

[Anonymous]

Hi everyone!

I just looked at our pre-approval letter that was submitted with our offer and I noticed it said "a credit report has been prepared and reviewed by the lender and the loan has been run through an automated underwriting system prior to issuing this letter."

Is this normal for it to go through an AUS for a pre-approval letter? I am further confused because even though the subject of the email and in the body it was described as a pre approval it actually states in the letter itself that the loan as been pre-qualified based on these terms: sales price: $237,900 and loan type: FHA.

Any insight would be greatly appreciated.

[ShanetheMortgageMan]

Every FHA loan is run through automated underwriting. 

Some lenders are using the words "pre-qualified" instead of "pre-approved" if your loan hasn't been reviewed by an underwriter yet, so that might be why that word is used in the letter instead.  If you aren't comfortable, then ask your loan officer if it's being reviewed by an underwriter or if they feel it needs to be as part of the pre-approval process.

[Anonymous]

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@ShanetheMortgageMan wrote:

Every FHA loan is run through automated underwriting. 

Some lenders are using the words "pre-qualified" instead of "pre-approved" if your loan hasn't been reviewed by an underwriter yet, so that might be why that word is used in the letter instead.  If you aren't comfortable, then ask your loan officer if it's being reviewed by an underwriter or if they feel it needs to be as part of the pre-approval process.

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We actually were supposed to go into underwriting this past friday or today. I just spoke to LO and she says the processor was sending it up to the queue this morning. My question was more because I am currently freaking out that we will get denied after reading so many horror stories. I was hoping that since the letter stated it had gone through an AUS that I shouldn't worry too much but I am. 

Middle score is 651, FHA loan of $233k income is $40/k Debt: $90 in minimum credit card payments, proposed mortgage is $1343 so a total of $1433 monthly. No late payments on previous mortgage or on credit cards. A medical collection did pop up the day we put in the application and we were told to pay that and pay down the card balances which shot the score up from 628 to 651. Downpayment of 3.5%, seller is doing $6500 towards closing so we are putting in the rest. Total due at closing is $10,560 which will leave us with about $9500 in the bank after closing. The DTI and the fact that the past month's stubs are lower than usual (work slows down right after winter but picks back up again during the summer) is my biggest concern for being denied. The last two years income has been $40,135 (2014) and $40,365 (2015) which better reflects what his income is versus the pay stubs right now. Should I be freaking out? LO says we will be fine but I am freaking out. 

[ezdriver]

As a general rule, if a files was prepared and submitted to an underwriter, it would at least mean that the file meets all pre-submission requirements. At that point, there is not much for an applicant to do but wait for a decision or request from the underwriter. No need to freak out since you [the OP] have done all that has been requested by the loan officer. A good reason to freak out is if you receive a request and then have no clue how you are going to respond to said request. Chill a bit and panic when necessary.

[Anonymous]

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@ezdriver wrote:

As a general rule, if a files was prepared and submitted to an underwriter, it would at least mean that the file meets all pre-submission requirements. At that point, there is not much for an applicant to do but wait for a decision or request from the underwriter. No need to freak out since you [the OP] have done all that has been requested by the loan officer. A good reason to freak out is if you receive a request and then have no clue how you are going to respond to said request. Chill a bit and panic when necessary.

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I will try and chill a bit. And yes, I know at this point it's a waiting game but unfortunately I am no good at waiting so I go searching for information to calm me down even if the information is "odds are you'll be denied" simply because I do not do well with the unkown. I appreciate you commenting back. Thanks

[theheater30]

I'm with you!! I can not deal with the waiting and the unknown. It's the worst and I keep reading horror stories so all I keep thinking is that something like that is going to happen to me!!!

[Anonymous]

Well we officially went into underwriting on 4/25 and received the CTC the following afternoon! So happy! And then so annoyed and now heartbroken.

Well, since we got the CTC we asked the sellers if we could move up the closing by a week (scheduled for 5/13 and LO officer said earliest they could do it was 5/4 so that's the date we requested). Unfortunately, we did not close early because the sellers bank (or agent not sure who would furnish this) took forever to turn in the payoff amount to our real estate attorney. Well they finally did last Wednesday and also informed us that we would need to move settlement up to 5/12 (yay for being sooner) because the sellers gave POA to their agent and she couldn't do 5/13. We said sure no problem. Yesterday my agent informed that we hit a snag, it appears that after factoring in the settlement help ($6500) into everything when the sellers receieved their HUD (I believe that is what it's called) the payoff amount is about $3k higher than they expected and they didn't have the money. The attorney accidentally called me instead of him so when I called back to see what she needed she sounded so angry that I asked if I had forgotten a paper or something and she said no that we had done nothing wrong but she just got off the phone with the seller and and was angry FOR us because it seems that the sellers didn't expect to have to pay their back mortgage (they're late), their overdue HOA fees or the property taxes they owe that they had not paid since they were selling and that's where the overage came from. She apparently told him that she would recommend we sue for breach of contract if he did not come up with the money to be able to close. She also said the seller's agent mentioned cutting her commission and my agent said the same as well but she wouldn't offer it just yet since she has done nothing wrong but if it means cutting it or not closing she will reduce it. So as of now we are in limbo as to whether or not we will close on Thursday. We are so upset and frustrated and honestly just done. It's been 6 weeks of living in a hotel room with my husband and 4 kids, my mom and grandparents are living in the spare room of my mom's friend and I just want them comfortable (my father passed away in Novemeber and my mother wasn't doing well so my husband invited her to move in with us so she wouldn't have to pay rent and worry about that and well my grandparents lived with her so they came as well) since they moved from Florida to here (DE) in February and it's been a crazy mess since then. We sold our home after a year on the market in March and moved out the 30th so since then we have all been in tight quarters and we were so happy thinking the end was near only to be thrown this wrench at the last minute. 

I just needed to vent somewhere. 

[StartingOver10]

Wow, I am so sorry to hear that the seller was totally unaware of their payoff balance(s) for both her mortgage and the HOA. Frankly the title co or closing attorney should have run a title search and gotten estoppel info long before now so the seller could find other resources to fund their end of the closing.  

If the shortage is $3k, AND if the seller can't come up with the $3k, then take the Realtors up on their generosity to contribute toward the shortfall.  I also think the title co should kick in something, even if it is nominal, because they really should have had the estoppels done much earlier in the process. JMO