FHA - Have dipped into my overdraft LOC recently... (loan officer, 2013, preapproval)

[AmyinNOVA]

Hello there, I have a question about overdrafting. I bank with Navy Federal CU and I have a NavChek tied to my checking account which is an overdraft LOC with a 15k line. I heard around the forums though that even though its there and available for you so you don't have NSF fees, an underwriter will still consider its use as if you were writing bad checks.

I never really thought anything of it and I have been using it like it was a credit card. I always pay it off in the same bank statement cycle though. So, I put together my December and January bank statements for my loan officer and even though I have tapped into it December and January it always had a zero balance on each statement.

I wrote a letter of explanation as my husband almost died at the end of last year and between dealing with the hospital, medical bills and also we were moving and I had to pay two rents for November and December I went negative a few times.

All of the amounts are relatively small. For December my total tap into the LOC was about 500 dollars but I paid it off on 12/15.
In January, it was about 800 and was paid to zero on 1/16. Six hundred of it was only due to a timing issue between something clearing and me waiting for a deposit to clear to cover it.

My middle credit score is 750, I make 125k a year, my rental history is total clean...aside from a Bankruptcy in 2009 and then a subsequent foreclosure in 2010... my file is squeaky clean. I have already received the preapproval on the loan but now she is asking me for all the documents to review and make sure it will be ok once I have a contract.

I know you cannot predict how someone will react... but do you think they will overlook the use of my LOC with an explanation letter?

[SmartMoney]

This should not be an issue, this is what OD is for.......if you are hassled, you're not working with the right loan officer......You want someone that is not going to let the tail wag the dog. Somewhere along the way, common sense left the room and everyone is doing the underwriter's bidding without challenge. I've decided if I research it and I can show I am right, I'm going toe-to-toe with the powers that be. Enough is enough!

So far this week, I've gone and won, 3 rounds. I'm sure I'll lose one or two along the way, but I am getting a bit fed up with some of the stupidity we are seeing. I am not dependent on outside underwriters, so of course, my tune is easy to sing. Lord help those that have to go to investor underwriters.

Side Rant - our industry (mortgages) is now regulated by a government agency with almost zero accountability (as determined by a Senate Oversight Committee - I'm happy to share that report). Soon, mortgage professionals (and Realtors, too, if they mention mortgages) will no longer be able to post on Facebook or mortgage forums such as this. Joy, imagine what fun the consumer will have when that happens.

Regulations.gov Be sure to click on the links to get the full picture.......

Sorry, rant off.....

[SmartMoney]

Now that I have calmed down and am off my rant, as long as it's overdraft protection and you are not using the funds for the purchase and can qualify with the payment, you should not have any problems.

Now, if the account was docked for Non Sufficient Funds (NSF), it would be another story.

[AmyinNOVA]

Thanks, yea I finally spoke to her and she said as long as I have the protection its fine. I do have 1 NSF fee on one of my accounts but that was just because I paid something from the wrong account and then instantly corrected the mistake. I wrote a letter of explanation for that...so hopefully that will be fine.

We are going to the mortgage office on Monday to "finalize our loan" ... not sure what that entails... but the loan officer said that should make me less nervous and just more excited. We put a contract in on a to-be built home and the contract was accepted by the builder and I'm still having a hard time believing this is actually happening.