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First time poster here so I will try to make this short. Found our dream home.
FHA LOAN
Purchase Price $197,500
Earnest money-$1,000
Monthly payment $1410.00 with PMI, taxes and everything included
3.5 % down
Self Employed
DTI 41/47
Gross annual income 150,000
increasing income every year. Business is just over 2 years old
Made offer on 4/9/15.
Filled out complete mortgage application on 4/13/15. Completed inspection that week. Everything was good.
Received conditional loan commitment on 4/29/2015.
4conditions were for our CPA to answer.Sent all conditions back on 05/01/2015.
Appraisal came in 10K over purchase price and clear title search on 5/11/2015
Got an email from LP that our UW did not accept a few of our conditions but loan is NOT denied.
We are set to close on 5/29/15
When I emailed our LP back she stated that a few of the conditions she did not accept were from our CPA. In my head this means that we will get denied since I cannot change what the CPA gave her. that is pretty much concrete. LP also stated she emailed the UW to get clarification to see exactly what the UW is looking for? I am so thrown off by all of this...
I am a mess and have been crying all afternoon. We already gave our notice on our townhome and basically have nowhere to go after June 1st...
Has anyone had a similar situation
Last edited by oakcreek1; 05-18-2015 at 04:01 PM..
Find out yourself just what it is the UW is wanting from the CPA and call the CPA yourself. I wouldn't wait around for others to get it done because just one person dragging feet holds up the entire process.
Your DTI is very high, higher than most lenders allow. Maybe there is concern on their end? As I'm sure you're aware, self-employment can be very volatile and they may want to see more stability than 2 years if you have a lot of debt and aren't putting much down.
Thanks for the reply. It was 41/47 when we applied. Since then we paid of ALL of our CC & car note. It should be a lot lower know when the scores refresh. We also sent statements for everything showing 0 balance and bank statement that this was all paid from savings.
Your debt ratio, in and of itself, is not a concern.
Could be anything. We can't tell if you file separate business returns, if there was a change in ownership positions, if there was a sale of something that was a recurring expense, but will no longer be a regular expense, could be a lot of things, and could be minor.
Were you copied on the CPA letters? Can you call him/her and get them? If not, were I you, I'd call the CPA myself, ask "what did they ask for, send me what you sent them."
There's a problem here, a conflict. Your CPA, by their chosen profession have agreed to treat your information with the utmost secrecy. The underwriter is asking the CPA to provide a warm and fuzzy statement to get off the hook from making a decision that could come back to him/her. For this reason, from job to job, I have carried the Code of Conduct for finance professionals to ram down any UW's throat to show what they ask for is unethical.
Your balances being paid down, matter not. Those balances constantly move and you are stuck with how they were originally captured. I also agree, while 47% is high, it's not a death warrant. But if there was declining income or increased expenses, the calculation method could be in question.
The problem, succinctly, is you don't know what you don't know. Where is you loan officer now? The processor is on overload and putting out the biggest fire. Make your fire bigger.
This is what they asked for from my CPA. I saw all the conditions and my CPA emailed to me and I forwarded to our LP.
1-Up to date financial statement from Jan 1 to April 31st (they had up until Jan 31 before) (30,000 profit for those few months)
2-Letter verifying business address, business phone and stating that business is over 24 months old. We also sent our official state LLC document to verify the 2 years.
3-explain how he calculated income on the 2014 taxes. She calculated a 2,300 difference. She wanted explanation for the 2,300. CPA claims she calculated wrong and wrote a letter showing her how he got that number.
This is what she wanted from us:
ID's
Hubby's green card
last 2 months bank statements
3.5 percent downpayment sitting in savings for last 6 months
finally letter saying car was paid off.
Here is why we thing we are being lied to: LP said she received the Updated loan commitment Friday evening but said she emailed UW for clarification. If it wasn't denied, wouldn't she see the updated commitment letter and know exactly what we need?
She said she emailed the UW to get clarification and to see exactly what she is looking for.
I am heartbroken. Not to mention I feel awful for our sellers. They are packed up already and they are supposed to close on their new home right after our supposed closing on the 29th....
WHAT SHOULD WE DO GUYS? Hubby called the LO and he said we have 11 days still hahhahahah, everything will be fine. Those were his exact words.
We get commitments out of underwriting all the time that require clarification. As long as humans are putting conditions in writing, humans reading those conditions will have questions. What makes it challenging, your processor is very familiar with the file when the file is submitted. Then 5 days go by and the commitment comes out. By then, the processor has touched another 20 files and now must reacquaint themselves with your file and figure out what exactly the UW wants. I think it's a stretch that you are being lied to, more like an overworked processor. Not only has she done the only thing she can do, she did it after normal business hours.
Items #1 and #2 and standard. I also can't tell you how how many times an underwriter has found an error on a tax return. Without seeing the actual documents, we can guess until we are blue in the face. When there is a claim of a discrepancy, it usually involves non taxable items, such as HSA and 401 contributions. Many times the reported income paid to officers won't match the W2s. I don't know if that is the issue, there are literally hundreds of areas. But here's the issue as it applies to you - with a 47% back ratio, what will happen if the income drops by $200? Did your accountant understand the question? Many times I've seen a disconnect between UW and CPA. Chances are the loan would have been suspended if the calculation impacted the approval.
Make sure you've turned in what was requested and give the underwriter an opportunity to get back to the processor. You've done all you can do, pick yourself up and stop with your pity party and focus on something productive. Check in once a day with the processor, by email, copy the LO, your husband, and whomever you think requires notification. Check in with your CPA and ask about vacation plans for the rest of the month - know where all the people you may need will be. But the LO is correct, 11 days is a long time in the mortgage world. Sit tight, keep watch and stop obsessing, it won't change a thing.
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