In UW, VA Loan, pre-approved - about to have a heart attack !! (loan officer, fixed rate)

[newgramma]

Hello, all. Got a call yesterday from our Loan Officer that UW might reject the loan over some questions.

The facts:

We filed Ch13 in Oct 08. Had a 5 year plan, but careful, diligent budgeting got us done in 3 1/2 - Jun 2012. We have a clean, on time rental history as well as all credit/installments since on time. Car loan for 17 months.

Our Home was originally included in the BK, but was short sold before foreclosure in Mar 09.

Hubby and I are both vets with CoE.

Current scores are: Hubby, Equifax: 673, Experian: 642, Trans Union: 672
Me, Equifax: 631, Experian: 609, Trans Union: 684

Hubby makes aprx $75K/ year
Debts are Car, $330, 2 little credit cards started this Spring to establish credit (both @ about $150 revolving out of $500 credit limit) and deferred student loans (I am back in school).
Current rent is $1260/mo. New mortgage would be $1050 PITI/month ($175K @ 3.49%, 30 yr fixed VA loan)

We had a pre-approval and good faith estimate prior to making the offer.

The home we found/offered on is in great condition and priced below current market (eager seller) and he has agreed to pay all closing costs. We made our offer based on Regions loan officer having verified we qualify for the VA Loan.

Underwriter was concerned about 2 things: 1) a 2006 lease that terminated May 2008 with 0 balance mis-reports on Experian (bt NOT on Equifax or Trans) as late pmt in Feb 2011!!! I secured proof from BMW FS immediately, and 2) what happened to the shortfall on the short sale? This was a forgiven debt, 1099C. I sent proof of both immediately.

NOW, I am on the edge of my seat, near panic and/or heart attack.

If they reject us, WHO do I go to??? DOES ANYONE KNOW A LENDER/BROKER THAT WOULD WORK FAST???

Thanks for any help,

Mary

[newgramma]

I appreciate the rules of the forum and wish everyone here could have the benefit of seeing your message.

I'd like to let anyone else out there who may be in a similar situation as mine to know that there is hope and there are good alternatives.

I also want to thank you in a public forum for a good "Plan B".

Mary

[SmartMoney]

From what you descriibe, VA will not have any problems with the loan, it's the investors out there. If you were able to prove there were no late payments Feb 2011, I don't see the problem - you just may have an underwriter afraid of their own shadow.

Fortunately VA loans are assignable and should this loan be denied, I do believe you should pursue another lender that has an underwriter on premise (not several hundred miles away) that can give the green light.

[newgramma]

I am hoping it is just a case of "double/triple checking" - Regions is notoriously conservative.

I am coming up on a hard timeline: gave notice to our apartment leasing office that I would not renew lease and must begin scheduling mover, utilities etc. Hubby also needs to schedule time off for closing/move.

This bank seems to exercise zero urgency. Is this common?

Mary

[SmartMoney]

If banks had to worry about who was giving notice and who needed to take work off, nothing would get done. You can't put your rent notice on anyone else, it's that simple. Only you can make the decision if the possibility of being homeless is worth the risk of saving that one month's rent. Sorry, but this cannot be anyone elses problem except your own. Your loan officer isn't going to be the one on the streets and neither is your agent. Where everyone got the idea that buying is suppose to be choreographed perfectly is just not a reasonable expectation in today's challenging lending environment.

As for the husband, again, you're trying to make that perfect timeline to save money. Everyone gets that, but you need to accept it may not happen and have alternate arrangements.

I think this is most likely the hardest nut to swallow today......many things are beyond your control, some things beyond your loan officer's and Realtor's control. Everyone can only guide you towards reasonable expectations, but emphatic deadlines only exist when they are under your own control.

I'm not trying to cause you distress, just the opposite. If you went with your Realtor's recommended lender, let them lean on your lender. You need to be prepared if things don't line up as you would like. Don't misread that I am saying they wont' work out......but have a plan. Then if the stars and planets do align perfectly (and they often do), you'll appreciate it even more.

[newgramma]

SM, thank you so much for prevailing reason and logic. It wasn't that I expected them to bend to my timeline (altho I'd HOPED it), it was that I was up front about what I wanted to accomplish and was willing to do to expedite. I could have used more information/communication about expectations and statuses!

I've since contacted three other LOs, 2 of which know the 1st and said it is just how it works these days (they are both in the same small town as the 1st) and it could just as easily happen with them and they won't be able to move any faster. I will not be using them.

I don't get how these LOs don't have a better grasp of what to expect from their own UW - they work with them every day!

As it turns out, the original UW my LO used to qualify us had quit and our package was shifted over to a different UW who rejected us without asking for proofs. She had to track down the package and insist that we are re-reviewed with the proofs. That won't happen until Wed, at the earliest. She seems optimistic. But, just in case, I have another, aggressive, more optimistic back up, whose quick grasp of the facts and the situation and SOLUTIONS is impressive! Quickest, best is the way to go.

From what I gathered from the other 2 LO (different banks) in her small town, banks are short staffed in LO, processors and UWs, due to the poor profits and earnings in these previous years. Even tho the market is ticking up in housing/mortgages - they are not staffed to keep up yet.

We are working on a proposal to the seller to enter into a bridge lease so we can move and have time to get closed. He has leased the property in the past and we hope he will be amenable.

We have a clean rental history, 17 mo of on time car pmts, paid our 5 year BK13 plan off in 3 1/2 years, and low balances on 2 credit cards, also paid on time, as well.

I've told her repeatedly to, "hold out the hoops and we'll jump through them," to get this done and us back on the road of home ownership and financial stability.

[chri_s]

Newgramma, I actually work as a loan officer for a well known military bank specializing in loans for current and former military personnel. Our turn times are lightning fast, with a maximum of only 72 hours required to gain the clear to close.

I was pleasantly surprised to see how thorough you were in the details you provided, so I took the liberty of pricing you out under two hypothetical scenarios. I structured the first scenario to include both you and your husband on the mortgage. However, in the second scenario, I eliminated your name as a party legally responsible for making payments on your future mortgage, while still preserving your name on the deed and the title of the home, which in turn preserves your half of the ownership in the future home.

In the first scenario, I was barely able to qualify you for a 3.625% fixed rate with all your closing costs covered, including GA state transfer taxes ($700.00). After learning this, I came to the conclusion that it is highly doubtful the initial GFE provided by the first lender included all applicable costs and fees in a complete and accurate way. In fact, I presume your GA transfer taxes were left out of the equation, since this is a common mistake made by many loan officers. However, the biggest reason this rate (3.625%) is slightly higher than the norm (3.25-3.375%) is because banks rely exclusively on the lowest middle score found between the borrower and co-borrower, which was 631 in your case.

Thus, this prompted me to check what you might qualify for with your husband listed on the loan as the sole party legally responsible for repayment. The results were much better. His middle credit score (672) made it possible to qualify for a 3.375% rate with all your closing costs covered, including GA transfer taxes.

If you'd like, I'm happy to put together a GFE for you using either of the two aforementioned scenarios, which you can then use to pressure any current lenders you're working with for a better rate. By the way, judging by the sound of things, it sounds like you initially worked with Flagstar Bank for the 3.49% rate--correct me if I'm wrong.

Anyway, let me know if I can help you any further. Cheers.