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Old 06-09-2010, 04:38 PM
4 posts, read 61,875 times
Reputation: 15


After signing and submitting everything my LO asked me to, he contacted me and said there are a couple items on my credit report that I need to provide a LOE for. I wrote a great LOE, and it was all true, so I'm proud of that.

Easy enough, they were years ago (almost reached the SOL) and they were just utilities and one old $200 credit card I have since paid off (still from years ago, I was unaware of it until the mortgage application)

The thing is, the LO said he can't tell me if this will make the underwriter not approve me, that it could go either way. How could they not have seen this from the beginning? Is my loan really in jeopardy over some OLD utility bills and a credit card I've since taken care of?

The credit card is reporting as payment plan in good standing, but in reality has been paid off. I'm fighting with them to change it.

Everything else about my application is great, I have no debts (except the old utilities almost ready to fall off the report), same employer for the past two years (just graduated two years ago).

Now I'm worrying to death over the LO saying it could go either way. This is an FHA loan and my first time. I don't think I will be able to sleep tonight Why couldn't he have told me this might be a problem from the start???? How much of a problem could that be????
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Old 06-09-2010, 05:24 PM
68 posts, read 463,881 times
Reputation: 25
Anything is possible, UW process is the most stressful and painful, I'm in the same boat right now with BOA...I don't even get it...My manager signed every single explanation and still they doubted

I have 760+ credit score which 3 revolving accounts were auto purchases (all new) and 10 years of credit history not a single late payment.

After submitting ALL my documents to BOA and VOE was also faxed over by my manager, they required to speak to my manager, LOE of why my paystubs have variations (different pay amounts), I told them in the beginning that we average it out based on salary and commission and because accountant didn't separate the base and commission, we just averaged it out as a whole and report it as average. So now they want DETAILED information how it got to that specific amount......and I'm like what the?? Basically it's partially our fault, because our payroll department not being detail enough to include my base $ and separate the commission now I have to explain the whole damn thing from beginning to end and I know from experience that the more detail you give them, the more they have questions and doubts...

so beats me....I reapplied with another lender and hopefully things will fall through, otherwise I guess it isn't meant to be.

my loan contingency got extended until this friday but if I don't get an answer by then, i'm going to lose house..oh wells...
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Old 06-10-2010, 06:18 AM
Location: Plano, Texas
1,675 posts, read 6,798,097 times
Reputation: 697
Are these collection accounts? If so, the underwriter could require you pay them off. Are you working with a direct bank or a broker?
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Old 06-10-2010, 09:16 AM
4 posts, read 61,875 times
Reputation: 15
my1sthome....thank you for your reply. Sounds like youre going through a mortgage nightmare! I really wish you the very best and that everything falls into place. Keep the board updated!

Victor...the utilites from 2003 are collections. The credit card shows as the original bank but I paid NCO, even though they do not show on my credit report, only First Premier Bank is showing. (Again, they reported as "payment plan paying as agreed" when I actually settled in full.)

I am working with Suntrust. I'm just so surprised that after all my documents and everything, the LO says it could go either way. Actually, the LP brought the items to the attention of the LO after he submitted everything. So a week before it goes to uw, I'm scrambling to fix these things as best as I can.
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Old 06-10-2010, 11:46 AM
Location: Plano, Texas
1,675 posts, read 6,798,097 times
Reputation: 697
Old collections, more than likely nothing to worry about. I think you LO just doesnt want to give you a certainty as it is up to the UW.
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Old 06-15-2010, 01:30 PM
4 posts, read 61,875 times
Reputation: 15
This may be some sort of a rant, and I've included alot of information that might help someone else who reads this someday.

Today, I got the denial. The LP said the uw didnt like that I paid off an old collection for $266. It seems I have some medical bills for a couple hundred dollars too.

I was prepared to pay off the medicals, as the LO said it will probably be a conditon of my approval.

But hell, I paid off one old account and the uw denied me for it!!! He said I didn't pay it off until I started the loan process. BUT in my LOE, I said I was unaware of the collection until the loan application and promptly paid it.

I thought I met all the marks for an FHA. No, I DO meet all the conditions from what I have read. And had a damn good LOE. I'm copying and pasting it just because I HAVE been down a long hard road to get where I am today. I'm proud of my achievement and stability and responsibility. And for the past two years too! (As is mentioned in FHA guidelines)

I dont understand how I was denied. The LP even asked the uw if I could submit a letter from my landlord that I've had for four solid years, with rent higher than my house payment would be, but the uw said no! WTH!!!!

So, here is my LOE, which is not only honest and factual, but shows I have worked hard to get my act together! I made the text red on the parts that I think show I have worked my arse off to better myself. Isn't that what FHA is about..look at the past two years, see improvement and never mind that i have rented the same expensive place for four years. PLUS i have no debts!!! My car is paid for, I have NO credit cards!

• General Recovery for XXXXXWater $237 in 2003
This item is another utility bill that occurred during the 2003 divorce. As with the other utility, he was to pay since I was making the transition from housewife to single and employed.
• Palisades for Verizon $226 in 2003
This item is the phone bill, incurred at the time of divorce in 2003, and was to be paid by him. After our divorce, I moved in with a friend and I had no utilities in my name until June 2006, when I leased the apartment I currently live in. I have requested with the collection department to correctly report the date.
• First Premier Bank $511 on 4/2007
This item was incurred shortly before I was accepted into nursing school in 2007. Since I was in school and had no income, this card went unnoticed until I recently became aware of it. When I became aware of this debt recently, I paid NCO, the collector who took the account.

In 2007, I entered nursing school knowing that I would be the sole provider with minimal income and resources for the duration of my schooling. My credit appears to have been affected by the inability to pay debts at that time.

However, I am proud of the fact that when my credit is examined, it is clear that since I graduated school in 2008, I started paying off my debtors within a month of my first nursing job, I have incurred no more debts, have lived as the only adult in the same apartment for four years and have had the same employer for a year and a half.

After a divorce in 2003, I was determined to become financially stable and independent; and I have done exactly that in the short span of two years. Upon graduation, I started the task of improving my life by improving my credit and finances.

This letter of explanation hopes to highlight that the problems of the past are just that---the past; and that I have demonstrated stability and responsibility in recent years, earnestly making the effort to become qualified to purchase my first home.
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Old 06-16-2010, 06:36 PM
8,411 posts, read 21,615,090 times
Reputation: 9915
You provided a huge clue without realizing it.......you don't have any credit other than collections or accounts that have been settled for less than the amount owed.

Even though your score was fine, you loan officer should have found alternative credit references to show you can pay bills on time.........based on what they turned in, the only credit you have is bad credit.

Talk to the loan officer or the processor and ask them if they ever received an automated approval (DU or LP, which are approval underwriting systems......so you may want to stop using "LP" to identify the processor). Or contact another loan officer ask them to run the loan thru their automated approval process and see what answer they get. If they get an "approve/eligible" there is a way to make the loan work. Seek a 2nd opinion. Contact someone here on the board that can run DU in your state. I'm a bank and have limited areas to lend, but I'm pretty sure Victor, Shane and dad2jules are all brokers that can lend in almost every state.
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