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Currently have Conditional Underwriting Approval. Credit card and other Loan History is perfect (no lates). However, we have an issue with 30 Day mortgage lates for a rental property. I'll note that for some reason, our current loan servicer doesn't report, so everything is dependent on VOM. Dates below for each late:
Sept 2019 (9 months ago) - Note, there have been perfect, on-time payments since.
3 other lates further back in early 2019: Jan, March and April
Attempted to buy last year in October 2019 and was ultimately denied. Ironically, we got close, but the loan officer was only going to get it over the finish line if there had been 3 lates (at the time there were 4 lates in 12 month period). Scores were lower at time too - approx 620.
Now I'm with a different lender with better scores, income and only 1 late (Sept 2019) in the 12 month period.
Main questions: I know that typically one 30 day late is acceptable within 12 months. Will the previous lates hurt our chances? They're trying to frame everything within the last 12 months, but I'm concerned if they dig back to 24 months. Also, given that our previous lender was going to allow 3 of these lates (within 12 months), is this because each lender has different levels of "flexibility"? Seems like the line between guidelines and reality is blurred substantially.
I'm trying to look at this through the COVID lens as well - will the fact that our financial standing has gotten stronger, despite COVID, play into this in terms of compensating factors since we have really strong, stable jobs? Or is that meaningless? My hope is that our clean track record since Sept 2019 helps.
Thank you so much in advance! Just looking to get an unbiased feel. My loan officer feels good about our chances, but I'm on eggshells. He even mentioned the possibility of switching to a different kind of loan with low DP (3% or 5%). Unfortunately, I don't have funds for any other option where higher DP would break the ice.
Thank you for the feedback. I'll find out. That said, is there a rationale as to underwriting seeking 12 month history vs 24 month history? Or does it depend on the file at the time? Just looking to see if there's some kind of logic behind the process or if it's case by case.
24-month lookback isn't really a Thing in traditional lending, unless you are refinancing a Modified loan, or a bankruptcy or some other mitigating factor.
Since the forbearance crush, credit score and mortgage payment history have become much more important to lenders.
I could see a situation wherein you get an Approve/Eligible, but then the non-reporting mortgage history comes in with a 30-late and your file is downgraded to a Manual Underwrite or even a decline, depending on the type of lender you are dealing with and their capacity to mitigate risk and place loans.
Debt ratio over 45% is another layer of risk. Assets may become a big player here, in regard to compensating factors. I could see an underwriter asking for proof of six months payments on all mortgages, in reserve, at the time of closing. But maybe not.
Sorry to be so vague, but there is a wild variance in the structure, operation, and relative Clench Factor among lenders.
So now the plot thickens. The servicer for my current mortgage on the rental property faxed back the VOM form, showing that it's current and in good shape. However, they didn't explicitly call out any lates. My lender followed up asking if they can provide clarity and so far the servicer is just ignoring us and saying look at the ledger.
Few questions come to mind, as this is a weird scenario. From purely a technicality standpoint, if there are no lates explicitly mentioned, can that mean an input of "0" in term of AUS? I guess I'm wondering what the underwriting team will need to see - is the form enough as it stands or will they insist on seeing a ledger? Is this kind of a "burden of proof" situation for the underwriter to bare?
Waiting to hear back from my lender as to next steps and strategy.
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