FHA loan after foreclosure. DU approval but underwriter denial

[tmcki]

We are past 3 years from foreclosure. We were DU approved but the underwriter denied it. All I know at this point is due to high dti and credit. Is it possible to get it overturned? For the dti part it can be fixed due to raises for me and the wife plus we are looking at a house that is $20k less than what we submitted. For the credit part I am unsure of exact reason. Lo said uw said derogatory after. I looked at reports and only derogatory was accounts that we paid in full or settled for less. All over 2 years ago if I am correct. Help would be greatly appreciated.

[Cat Damiano]

This would be something that you would need to speak to the loan officer handling your loan about as they would have a full file on you with all of the information necessary in regards to your debt and income to answer these questions.

[tmcki]

I have tried that. Couldn't really get much information out of LO. I know there is big difference in the way he calculated my income vs the way the underwriter did. But the dti is easy for us to overcome. Its thr credit part that I dont know. Is there a way to find out the specific reason or can only another underwriter see that?

[Cat Damiano]

Only the underwriter would have access to that information. For FHA the process is pretty straight forward, so I am not sure why you would pass a preliminary loan app and not move through underwriting.

[tmcki]

Thats why everyone is scratching their heads. I do know that the UW came up with dti of almost 60%. Clear that's a problem which like I said that's pretty easy to overcome since the house is a lot less than what we used to send to UW. It's the credit part that I can't find out. When we get the denial letter will it state clearly on that?

[Cat Damiano]

It should, but if you thought there was a problem with your loan officer, why didn't you try to shop around to compare? There are many FHA approved lenders out there;

HUD FHA Lender List

[tmcki]

Didnt have a problem until after denial. My pay I'd kinda difficult due to not being there for over a year and also that my hourly rate fluctuates. So he used avg of straight time with no ot. UW used base pay rate for my position even though it's clear that I don't get paid that rate. Upto that point everything was good. Had actually been working with him for almost a year to get prepared. But he didn't really have much guidance after that.

[oldhousefool]

Underwriters turning down loans even after pre-qualification is happening a lot more often now. You may fit the FHA guidelines but the underwriters don't have to follow along. That's why I'm not holding my breath when it comes to getting qualified for another home after foreclosure. Fortunately, my husband wasn't on the loan for the house we're losing, so we're planning on repairing his credit and going with him on our next attempt.We were trying to buy and bail; I was pre-qualified on the basis that the first home was rented out. According to FHA guidelines, it's fine as long as it's for a documented reason. But the underwriter didn't want to count the rental income so we were denied due to a high DTI.I don't think there is anything you can do besides try another underwriter--I would check with your LO to find out who they were going with and if there are other underwriters they can try. If they won't do it, then check with other LOs and tell them upfront that you were turned down by a specific underwriter and that you need to try others.Good luck.

[canative]

Is it true that if you have extenuating circumstances - there are exceptions to the 'three year' waiting period?

[Cat Damiano]

Hi canative,


Welcome to the forum and thank you for joining..........


Extenuating circumstances which if met, reduce the required waiting periods to 2 years on a bankruptcy and 3 years on a foreclosure, for a new FHA loan. Extenuating circumstances are credible excuses for the bankruptcy or foreclosure that can be interpreted to mean that the likelihood of a recurrence is very low. The lender will be looking for an explanation that involves multiple causes for the bankruptcy or foreclosure. People lose their jobs, they get sick, they have accidents, they suffer deaths in the family, they are victimized by fraud, etc. One of these in and of itself is not likely to be viewed as an extenuating circumstance, but a combination of them might. Another note is that extenuating circumstances do not include the inability to sell the house because of a job transfer or relocation to another area.

The lender will also look for evidence that, whatever was the cause of the past problem, is likely one that is not going to reoccur. In addition, they want the borrower to document that since the occurrence of the bankruptcy or foreclosure, the borrower’s capacity to handle financial affairs has improved. A rising credit score and an ability to make a significant down payment on a new loan are good evidence of this.

The major hurdle facing the borrower who wants to plead extenuating circumstances is convincing the lender, but the prospect of success is much lower than it was before the financial crisis. Every aspect of loan underwriting has gotten tougher, and the ability to plead extenuating circumstances is very difficult. If you claim these types of circumstances, you will have to back up your claim in some way. They're not just going to take your word on it. Mortgage lenders must verify that extenuating circumstances actually did exist, typically through the use of certain documents:

• Notice of job layoff
• Job severance letter
• Divorce decree
• Tax returns that show a loss of income
• Other documents that might support your claim

Again, the goal here is to show that you suffered from events that were largely beyond your control events that reduced your income or increased your expenses (or both).

[cobweb]

I have been so fortunate to find this site. It gave me great encouragement, there were times when I felt down reading some of the stories here, so I tried to only read success stories after a while I haven't made a payment in 24 months, I received a letter of foreclosure, to which I responded asking the court for more time, ideas for which I found here on this site.Through this forum I was able to get executive contact phone numbers and also a site that I could log into to check on mod status (posted by Cat) without having to call the bank 5 times per day! I was able to obtain info on exec line that I could not get from the loan specialist such as the level the mod was at. One actually told me that it was being reviewed for approval and this is great and it means they have a plan in mind, I was able to sleep better that night.

I felt like I had company while I held my breath and waited at the mercy of WF. Well long story short I got my trial payments approved and I wanted to share with you all. Also the site link I got here to log in and check status is where I first learned results which loan specialist called me with the next day. I just went along, of course I had stopped worrying and celebrated the night before lol

Also another testimony that NACA works, especially if you have the required proof of hardship. I am a business owner so they had a hard time figuring my income from real expenses. NACA helps you in presenting your documents in the exact way the bank wants them so you don't have to keep faxing back & forth. I just kept hitting redial on my fax very often for just about a year! After I went to save the dream spent just about 3 days going back & forth gathering stuff, getting docs signed and going back to conference. I also inadvertently mentioned that the non borrower only contributed partial income only later to realize it's a good thing I did because NACA wont tell you this, they just put all the household income out there and tell you it has to be so. If it had remained so I still would not be able to afford the payments as he only contributes a portion of it. I decided to dedicate the time to do it and it paid off.

I encourage everyone to keep fighting as long as you have supporting documents that show hardship such as a reduction or loss of income and also to show that you can afford to make future payments, this is what they are looking for...go for it!

I wanted to say many thanks to Moe Bedard and to you Cat, you guys are awesome and deserve awards...cheers!

[Cat Damiano]

Hi cobweb,


Welcome to the forum and thank you for joining............

I am so happy that the information that I have posted here on the forum was able to help you. Congratulations on getting the approval to begin the modification, that is a big hurdle to overcome! Please keep us posted on your progress throughout.