FHA Loan Frustations

[Anonymous]

Hey everyone, I need some advice on this situation.

There is a property my wife and I have been working on purchasing since the middle of October. At the time my credit was around 590, but I found an FHA lender that worked with no overlays and could take the case. I was never able to pass an automatic underwrite, and was told I could only do a manual. It took many weeks of discussion but we ultimately came to a solution of me renting out my current property to increase my income to get an easy approval. At the end of December we had a plan and my lender sent me a qualification letter so that I could start negotiating with the sellers. Within a week we had come to an agreement on price, and our contact specified January 31st for closing.

Fast forward to January. By January 4th I had submitted what was supposed to be the last piece of documentation so that my loan could be processed. However on the 9th I was told that the bank transaction records I had sent had needed to be stamped by the bank. I sent in correct stamped copies on the 10th and was told that my file would be submitted to underwriting immediately. I also asked my lender whether or not we would be able to meet the January 31st deadline, and was told that would be no problem.

I called my lender again on the 12th and was told that the underwriter had had only 3 days to respond, and should have been sending me disclosures to sign by the 15th at the latest. I did not receive the disclosures until the 17th. I signed them immediately and they were returned. On the 19th my lender contacted me and told me that he was working on getting the appraisal ordered and was hoping it would be ordered by the 22nd. Guess what never happened.

So now today, the 30th, and one freaking day from closing and after badgering every person I'm able to contact at my lenders office, my lender called me and let me know that their underwrited doesn't like the combination of the facts that I'm a first-time landlord, I'm using my state's cash-assistance loan program, and that I received a refer-eligible from the AUS.

LUCKILY my realtor was able to convince the sellers for a 2 week extension. BUT now I'm left with my lender scrambling trying to find a way to get me approved through the AUS or get the underwriter to go for it. This lender has been nothing but a pain in the butt, terrible communication and incredibly slow.

What is my best course of action here? I'm incredibly frustrated with this entire process.

[NC_Mtg_Loaner]

Sorry to hear about your frustrations as it can be an unnerving process if realistic expectations aren't properly set.  

Is there a chance that your credit score is now higher than 590?   

Adding two months' more history to your credit profile could possibly boost your score from October to January, so you might look into this as you talk with current lender as well as a few others perhaps.   

Have you filed your 2017 Income taxes so that you now have proof of rental income being received?   (new landlords don't typically 'earn' lots of income and this may likely be a source of their 'skepticism', but rental agreements, tax returns and proof of rent received may really help.)  If not, get your returns filed ASAP as most lenders might require proof of rental income that will be documented in your Schedule E of your federal 1040.

[Anonymous]

Thanks for the reply. My credit score has indeed gone up substantially since I first applied. When we we're originally trying to get an approval through AUS I paid off all 5 of my credit cards, paid 2 of my 3 collections, and consolidated my 4 student loans into 1.

My credit score is now at a 645 mid but my lender says the AUS doesn't really care about that so it doesn't really help.

Also on the rental, I have a tenant lined up who paid a deposit a few weeks ago, and is supposed to be paying first months rent tomorrow. They were scheduled to start moving in this weekend, but I'll have to delay that now. So no, none of that was filed on my 2017 taxes since it's new for this year. I do have it thoroughly documented though through contract and bank statements showing the deposit.

[NC_Mtg_Loaner]

Did your lender/ loan officer pull a new credit report to use in the AUS?

Which AUS system is your lender using?

Running LPA or DU with your credit score above a 640 should easily provide you with an APPROVE/ELIGIBLE or ACCEPT/ELIGIBLE, imo.   

[H-B]

Even though you go to other lender and you want to stay under FHA the other lender has to transfer the FHA case# to new lender.  You have all the right to get right answer from your lender if not involve the manager of that branch. You have good score now atleast you can go with conventional loan. 

[Anonymous]

As far as I know, my lender did not repull my credit after all of the changes. I just told him what changes I had made and he factored those into my file. I believe they're using DU.

I spent the last few hours emailing additonal lenders that patricipate in the MHDC CAL program. Hopefully one of them will be able to close fast enough to still make this deal happen.

[JVille]

Getting your lender to transfer the FHA case # is not likely to happen. Surprised you are eligible for Homebuyer Assistance Funds when you already own a home. Thought those programs were for 1st time buyers (not owned in last 3 yrs), guess your program is different.

[Anonymous]

I talked to my first lender briefly today, and I'm honestly still not sure why everything fell through, but I did some of my own research and found out that the down payment assistance I needed to use limits the acreage to 10 acres. The property I'm purchasing is 32 acres. So that's strike one.

I'm going to start a new topic explaining my full situation and credit position to see if someone has a solution. Thanks for the responses.