VA Loan Denial question

[Dbremer]

We filed ch7 in July 2020, VA mortgage IIB.

some details:

filed July 2020

discharged 9/2020

current, paid as agreed VA Loan right up to July 2020 and went straight into Covid forbearance. Did not reaffirm. 

no payments have been made since 7/2020 due to multiple forbearances.  Exited forbearance 1/22 and took 5 months to process VA Partial Claim which they denied due to "incomplete application", which is a violation of RESPA. Flagstar claimed "lost paperwork", 30 day processing time between paper work.  A mess! They refused payment until Loss mitigation and loan modification was processed due to CH7.  Yes! Refused payment every month! 

They started foreclosure proceedings in June 22. Then put us back into forebearance after I complained to the CFPB and the VA in July. 

So, we put the house on the market since we were outside seasoning periods for VA, figuring we could get a new mortgage. No short sale, foreclosure proceedings have ceased, loan will be paid in full next week.

we were denied a mortgage today because of this situation , lender saying they needed the mortgage to become current before we could get an approval since it went to foreclosure, even though proceedings stopped. Again, loan will be paid in full on 11/16/22. 

the lender is saying it's the VA that needs the loan current.  Great file since ch7, no lates,  669 mms, low dti, over $150k income. 

any help is appreciated...should we look for a new lender? Trust that the VA won't guarantee the loan( hence the denial)? 
TY

[ShanetheMortgageMan]

It sounds like the loan will become current (by being paid off) in 8 days and if that is the only hurdle preventing you from getting approved at this lender then it's just a matter of time.  I'd recommend asking your loan officer to send that information to the underwriter and ask if they can approve you with one of the conditions being the existing VA mortgage being paid in full prior to closing.

You mentioned a loan modification was processed, when did that begin and what was the outcome?

[Dbremer]

Thank you so much for responding!

They denied both VA partial claim in April and a loan modification in June, then filed foreclosure in June. Very similar to their tactics Flagstar was heavily fined for a few years back. 

I asked about the condition but the lender is saying the Va won't guarantee the loan according to their VP of underwriting.  My COE states 100% $36,000.  

I assumed the Va would guarantee the loan as long as the condition was a pif loan.  

at a loss, we have a meeting with another lender tomorrow who thinks they can get it done "if the VA will guarantee the loan"...

[ShanetheMortgageMan]

Your COE indicates $36k because the claim hasn't been processed yet, once the foreclosure action completes then the lender may go ahead and file a claim and your entitlement could reduce.  The mortgage payment history may also be a concern, but it sounds like you have some extenuating circumstances that can be considered.  As long as you made earnest efforts to make the payments and documentation Flagstar refused to accept them then you should have a shot.