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Underwriting nit-picking

Creditboss
New Contributor

Underwriting nit-picking

We have a bit of a conundrum here, in the underwriting stage and have made different explanations for credit related issues, inquiries, etc. My closing costs and down payment has been sourced from my 401K withdrawal, my employment income has been verified, earnest money has been sourced from my income. We have had roughly 2k in cash deposits over the last month that were unsourced from random things that weren’t documented because we had no clue how any of mortgage rules in place. Is it normal for underwriters to come back and ask for explanations of these deposits that have no impact on the sourced employment income, which alone was enough to qualify and get a contract on the home we are looking at? Or could could it be because of credit history and scoring? DTI is around 24% , FHA 30 year with 3.5 down. Probably a question that needs a more broad explanation, but it’s a start I guess. Thanks ( MId scores are 590/578/613 )
Starting Score: EX 490 EQ 487 TU 489 as of 9/11/18
Current Score: EX 547 EQ 546 TU 556 as of 10/7/18
Goal Score: 600


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Message 1 of 6
5 REPLIES 5
CreditInspired
Super Contributor

Re: Underwriting nit-picking


@Creditboss wrote:
We have a bit of a conundrum here, in the underwriting stage and have made different explanations for credit related issues, inquiries, etc. My closing costs and down payment has been sourced from my 401K withdrawal, my employment income has been verified, earnest money has been sourced from my income. We have had roughly 2k in cash deposits over the last month that were unsourced from random things that weren’t documented because we had no clue how any of mortgage rules in place. Is it normal for underwriters to come back and ask for explanations of these deposits that have no impact on the sourced employment income, which alone was enough to qualify and get a contract on the home we are looking at? Or could could it be because of credit history and scoring? DTI is around 24% , FHA 30 year with 3.5 down. Probably a question that needs a more broad explanation, but it’s a start I guess. Thanks ( MId scores are 590/578/613 )

Absolutely! They want to make sure the money is not from a loan, money laundering, untraceable gift, cash advance, any number of things. The LO has every right to want to know where those deposits came from.


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DEC 2018: EX 777, TU 783, EQ 799

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Message 2 of 6
AZEsq
Regular Contributor

Re: Underwriting nit-picking

Yes, it's normal. They want to make sure you're not taking on more debt to pay off debt or to buy the house. They will want to source every dollar that goes into the account. If you have a source, disclose it or write a short letter of explanation. As long as you didn't take out a loan or borrow money without a gift letter, you're probably fine Smiley Wink

Message 3 of 6
JVille
Valued Contributor

Re: Underwriting nit-picking

Yes Every Dime! You should be able to go to your online bank account and pull up each of those deposits and get pictures of the checks deposited. And heaven help you if you deposited cash because they will want proof. If it’s cash then you are frankly SOL. I had clients who had garage sales and I actually had them take pictures of the festivities and the items being sold and the Tupperware box full of dollars and quarters.
Each deposit will need to be documented and if you sold something for cash you better be able to prove you owned it in the first place.
Being a unable to account for $100 is one thing $2000 is completely different.
Good luck!
Message 4 of 6
Creditboss
New Contributor

Re: Underwriting nit-picking

Thanks for the responses everyone! It all turned out ok. I do know that getting a mortgage is a very stressful event, and I suppose even for those with a perfect credit profile. But one thing I have learned from this fiasco is that anyone who is a first timer needs to educate themselves and study the ins and outs well before applying.The pre approval is merely a speck on the tip of the mortgage iceberg, with a ton more work that follows. We went into this totally blind, but luckily we have a very well seasoned LO who knows how to navigate extremely well, and also knows what his team will need to get over any speed bumps or hurdles along the way, and usually before the LP or the UW asks for it.
Starting Score: EX 490 EQ 487 TU 489 as of 9/11/18
Current Score: EX 547 EQ 546 TU 556 as of 10/7/18
Goal Score: 600


Take the myFICO Fitness Challenge
Message 5 of 6
JVille
Valued Contributor

Re: Underwriting nit-picking

Yes! That’s exactly what your LO should be doing. His/her job is to go thru your complete file and Anticipate and Fix any hiccups long before the file reaches an underwriter. You have a winner!
Message 6 of 6
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