Would FHA approve a "No Balance Payment" Student Contingency Loan (approved, credit) - Mortgages -Lenders, loans, financing, rates, foreclosures, short-sales, brokers, credit score, deed, lien, refinancing, borrowers - City-Data Forum

gnonyx · 10-19-2010, 12:29 PM

We applied for a FHA mortgage and were preapproved. The only thing holding up our mortgage is my husband's school loan. He was forced to retire as the company downsized, and being in his late 50's nobody wants to hire him. So he called the loan people and explained his situation and they gave him a contingency loan. Being he is not working, he shows a zero balance for last year and will show a zero balance next year. FHA is asking for a letter of deferment to pass our mortgage as we explained to them that he is not deferred, but on the contingency loan. Can they deny our loan because of the contingency loan? Thanks

gnonyx · 10-20-2010, 11:52 AM

Anybody with a logical comment?

SmartMoney · 10-25-2010, 06:03 AM

"contingency loan" is not verbiage used in the lending industry.

If a student loan is showing on your credit, you need to prove that no payments are due within 12 months of loan closing. (at least that is what it was the last time I looked it up - things are changing and fast).

Who is providing this contingency loan? What is the balance of the loan? What are the terms? Whoever is providing the financing is who you need to go to for a letter. Projected student loan payments are routine and should not been a problem to obtain.

You need to contact the administrator of the loan. The information should be on the note he signed. Has he received any loan proceeds? He may not have a balance now, but I'm betting there is a total loan amount he can draw, otherwise it never would have shown on your credit.