Fha Loan With Recent Lates

[Anonymous]

Hello all,

i am currenty in the process of obtaining a FHA mortgage with a mortgage broker,  we are building from the ground up and unfortunately we had a few late payments this year due to the gov shutdown and loss of my job. we have 5 recent lates reporting on an auto loan but has been brought current since ive been on my new job as of august. my question is will this effect us from getting the an DU approval our LO wants to submit our file now to be able to close in december. we are going off my wifes lowest middle score which in 603. our LO was aware of the lates when we contacted her and has since then issued a pre approval letter. we have 2 credit cards each that have 0 lates since they have been opened 3 years ago. i have asked my LO will this be a problem but she said shes unable to give a definate answer until she submits our file to the DU. has anyone been in this situation? 

[ShanetheMortgageMan]

Why hasn't your loan officer ran automated underwriting (which is what DU is)?  Seems a lot easier than speculating if it'll be an issue.  If you've completed the loan application and credit has been checked, running automated underwriting takes less than a minute.

If you receive an Approve through automated underwriting, then it means the system is OK with the late payments but it'll still be up to the underwriter to make a final call.  5 recent late payments will need a solid explanation on why you weren't able to make them, job loss due to the government shutdown is understandable but if you haven't done anything to prevent late payments in the event of another government shutdown then I could see an underwriter giving pause. 

If you don't get an automated underwriting approval then your loan would need to be manually underwitten, and FHA doesn't allow any late payments on installment debt in the past 12 months on manually underwritten loans.  It's imperitive your loan officer runs automated underwriting immediately to determine if this will be an issue or not.  Call your loan officer back up and ask them to do it today, or if they've gone for the weekend, then ask them to run it Monday.

On a separate note, why did your loan officer give you a pre-approval letter if they aren't sure if these late payments are going to be an issue?   Loan officers like that should find another career, IMO.  

[Anonymous]

Thanks, she will be submitting our file to the DU after our rapid rescore comes back. we will be working on a LOE to explain the lates and my solution to avoid another shut down is im no longer working for the government. hoping we can get by AUS with the lates.