HELP! RE: FHA: Thought I was Pre-approved. Only Pre-qualified. (loan officer, 2013, real estate)

[Siennastef]

Hi all~

I'm new to the Forum and definitely looking for your help and advice!

My Mortgage Broker came HIGHLY recommended to me by local agents.
I've been in touch with him for a year now. A few months back, he asked
me for all of our data--bank statements, tax returns, pay stubs, and he
pulled our credit.

At all times, in every conversation, I understood that I was "approved" for
an FHA loan and was told to start looking. I think the Official Date he told me
this was somewhere around the start of November 2013.

I found a home yesterday! and told the Seller's agent I was "pre-approved".
We negotiated and came to very good terms on the house. Contract is signed,
now Sellers Agent insisting on a "Pre-Approval" letter and said I only gave her
a pre-qualification letter!! Agent is giving my Mortgage Broker & I (6) days to
come up with a "Pre-Approval" Letter or they are threatening to cancel contract
and relist house.

Can a Real Estate Agent say a Contract can be cancelled if a simple pre-approval letter
is not given? In the Contract, we've been given 30 Days to get a Loan Commitment.

This is CRAZY! Here I thought I had been pre-approved, only to find out that I had
only been Pre-Qualified!!!! The Mortgage Broker pulled Credit and everything!

The Real Estate Agent is INSISTING that a Pre-Approval Letter be presented. The Mortgage
broker STATES that it is "against the law" to give out a Pre-approval letter...what on earth is
he talking about??

Now Mortgage Broker is making me rush to come up with the last 3 months of Bank Statements,
etc., and is telling me FHA could still reject us! WHAT?? He made me think I was Pre-Approved!!
And Real estate Agent won't take a letter unless it has the words "Pre-Approval" on it!!

Help! I've got (if everything is correct) only 5 more days to prove I can afford this house!
Thought I already proved it and had the letter I needed....

Everyone is telling me something different. Very Very Confused.

Any help will be MUCH appreciated!

[VictorBurek]

Pre qualified means that a loan officer has ran your credit and based on the information you provided, such as income, assets, etc... you are approved.

Pre approved means your information has been reviewed by an underwriter that has confirmed your income, assets, etc...through documentation such as pay stubs, W2's.

Most home sales are started with a prequalification letter as many banks will not underwrite a loan without a purchase contract.

I would have your loan officer contact the seller agent to explain the situation.

[thelopez2]

FHA can deny bases on what shows up on your newly submitted documents. You'll also have to get your credit pulled and run through the wringer again with all of your docs.

[Siennastef]

Thanks for your replies and I know that now, BUT,

Can a Real Estate Agent say a Contract can be cancelled if a simple pre-approval letter
is not given? In the Contract, we've been given 30 Days to get a Loan Commitment.

[SmartMoney]

Originally Posted by Siennastef

Thanks for your replies and I know that now, BUT,

Can a Real Estate Agent say a Contract can be cancelled if a simple pre-approval letter
is not given? In the Contract, we've been given 30 Days to get a Loan Commitment.

You've answered your own question with the verbiage in your contract! You have 30 days from date of ratification. It's not your fault the listing agent assumed they were receiving something other than a prequal letter. Now, you need to be sure your lender has delivered loan approval to you in that time frame or you risk your earnest money deposit if you remove your financing contingency without the approval (at least that's the way most contracts work).

And to be clear, this is the seller's agent saying this and not your own?

[BlondeLocks]

I'm no expert in this field, but I believe you need to get everything back to lender in a timely fashion - so they can get you a pre-approval letter within the 30 day time frame.

I know with new construction once you sign the contract and submit your earnest money deposit it states in most contracts you have 30 days to get pre-approval through a lender if not you forfeit your earnest money deposit unless you can't get approval within 30 days.

[rrah]

Originally Posted by Siennastef

Thanks for your replies and I know that now, BUT,

Can a Real Estate Agent say a Contract can be cancelled if a simple pre-approval letter
is not given? In the Contract, we've been given 30 Days to get a Loan Commitment.

If it is one of the conditions/contingencies in the contract that was signed by all parties, than YES. That said, the seller's agent is not doing their clients any favors by suggesting such a pre-approval letter. They really don't exist any more, and the agents, assuming you have a buyer's agent, should know this.

[justinbro2002]

most seller agents will not accept an offer without a preapproved letter. Don't know why your broker didn't make it clear you weren't pre approved I am not even sure why he would give you a prequalified letter to show to agents. Be diligent in getting your broker all the documents he needs and you should get approved in time. All he has to do is run automated underwriting unless you don't have a good profile or compensating factor then you are looking at manual underwriting that can take a week or more.

[SmartMoney]

The DU or DO is only as good as the information entered into the computer. When there are problems with a loan, it's usually because an underwriter did not interpret the data the same as the loan officer.

True pre-approvals do not exist the way we use to know. Over half of the lenders out there are experiencing a 2nd round of underwriting when documents are submitted for the clear to close. (Some even call it a QC review). The only thing that keeps the rat moving thru the snake's belly is the fact lenders MUST render the credit decision in 30 days. But even then, it doesn't mean the original approval won't change. This is why it is more important than ever to know who is doing your loan and what their process is for approvals and closings.

[Siennastef]

Thanks all~this has been a very frustrating process! IF ONLY....