Financing in 02184>Question Details

Danielle Hit…, Real Estate Pro in Marshfield, MA

I have a client that did a loan mod 18 months ago. Had pre-qual, sent him to get pre-approval and he was told waiting period.

Asked by Danielle Hitchcock, Marshfield, MA Thu May 30, 2013

Prior to mod he was 120 days late (currently trying to have changed to 90 as he believes error). Good ratios, decent credit score and 15-20% down payment. Would he have any chance with direct lender or portfolio lender? Is current l.o. correct that it is treated as foreclosure or short sale...he wasn't sure which or exactly how long waiting period would be until talking to U/W.

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Hi Danielle,

Just to add to what Mr. Raymondo said:

It's not just the I-9 MOP code and the problem it creates with the automated underwriting system that's an issue. Every underwriter in the country views a 120 day late on a mortgage as a foreclosure which has been the case for a number of years (even before the market crash this was the case) so even if the credit report doesn't show the I-9 code an underwriter will see the 120 day late & automatically "down grade" or deny the file. What this means is unless the borrower can get the 120 day late deleted, he will be forced to qualify for the new loan under the foreclosure guidelines which vary from program to program. FHA requires 3 years from the 120 day late to be eligible while VA only requires 2 years. Fannie Mae/Freddie Mac require 7 years.

John Burke
Senior Mortgage Banker
Peoples Bank & Trust Co.
(877)228-9069
1 vote Thank Flag Link Thu May 30, 2013
This is actually quite common with borrowers whom have had previous loan mods or short sales. Once a borrower hits that magic 120 day late, the lender can encrypt an I-9 MOP Code on the tradeline. Therefore any lender who attempts to run a loan application through the AUS (automated underwriting system) will get a Refer meaning the AUS can not approved them. Although FNMA recently put out a Memo stating these loans can be purchased by FNMA but must be manually underwritten, the problem is many lenders won't do manual Conventional underwriting due mainly because their Investors won't purchase these on the Secondary Market. The only other option is to remove anything over 90 days from your credit report. I have seen this done a number of times over the years with a persistent consumer or with the help of a credit specialist. Hope this helps!
0 votes Thank Flag Link Thu May 30, 2013
I have never heard of a waiting period. Try a different lender MBA Mortgages in Braintree could get you the answer you need.
Web Reference: http://www.JEPREALTY.com
0 votes Thank Flag Link Thu May 30, 2013
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