Financing in Augusta>Question Details

Nell, Home Buyer in Augusta, GA

I have been waiting four weeks for approval on a FHA kiddie condo loan from Regions Bank. My husband and I have credit scores of 782 and 767. Why?

Asked by Nell, Augusta, GA Wed Oct 13, 2010

Why is it taking so long and is this typical? Wells Fargo told me I was approved in 1 hour but I have heard horror stories about loans falling through at closing because of loans not being totally checked out before approval is given. I had been told that a certain loan officer at Regions was great and when she approved you know you were totally safe but she has now taken four weeks. She says that the package is with FHA now. How long does that take? They have had it for four days. Of course she has all our information, pay stubs, proof of savings, income tax info., and proof of college and work for our daughter. Her credit file is empty since she has been a student for last 4 years and working for the college. We didn't want her to have any debt or get used to credit cards. Is that what is taking so long? There seems to be some disagreement in the rules for kiddie condo loan. One underwriter said Yes at Regions and One said No, because our daughter MUST have a credit file.

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Nell,

At the risk of sounding like a Zen Psychotherapist rather than a Real Estate Agent, "It has nothing to do do with you."

Lenders are nervous as cats on a hot tin roof right now. What should take 3 days, takes three weeks. If you can think of this as an exerecise in patience, it may be easier. Have you asked your agent for help?

Gary Kaupman
Web Reference: http://www.dixongary.com
0 votes Thank Flag Link Wed Oct 13, 2010
Your credit score isn't what's holding up your loan.

It usually takes 45 days, perhaps even longer, for escrow to close on an FHA loan from the time of acceptance of your offer. For an FHA loan, they require at least 2 appraisals. And they should pretty much agree.

We had to back out of escrow when the appraisals came in at $295 and $400K. The bank had to conference the appraisers to seek a common ground, but the low appraiser wouldn't budge. After weeks of trying to get a resolution, we gave up, and moved on.

Wells Fargo may have approved/pre-approved you, but by the nature of your FHA loan, it has to be reviewed by the underwriter who will base his approval on the results of the appraiser (and the results of any inspections you may have mentioned in your contract).

That's another question: was there a mention of a pest report, roof inspection, etc? If so, the underwriter may make it a condition of approval to complete certain safety and hazard issue repairs before he approves the sale.

Good luck!
0 votes Thank Flag Link Fri Oct 15, 2010
I called HUD on this one. HUD does not state if credit is required by the borrower when the parents are co-signing. The representative told me to have my underwriter contact HUD's home ownership center for more explanation. This is a password restricted area that only underwriter's can access. I believe that your daughter needs to have at least 3 non-traditional lines of credit (rent, cell phone bill, car insurance, utilities) in her name for at least one year. However, FHA guidelines don't state that this is the rule. The rep said it's up to the underwriter to decide.

The term "Kiddie Condo" doesn't mean that you are buying a condo. However, if you are buying a condo, Stephanie McCarty is correct. The condo must be approved by the lender not by HUD. Here's the process and it takes a while if the condo was not FHA approved: Home Owner's Association fills out condo questionnaire. Condo insurance, financials and questionnaire are sent to HUD. HUD approves the loan that if defaulted they will pay the lender 100% of the loan. HUD may reject the property as well. Once approved, the a case number is issued and the lender can move forward. This can take up to 45 days to process.

I recently had to get a condo project approved through HUD and it took 30 days. I had to drive to HUD's office in person to speed up the process (typically takes up to 60 days). So, if the Loan Officer (LO) says that the loan is with FHA, it means that FHA is processing the condo paperwork. An in-house Direct Endorsement (DE) Underwriter may save you a few days because a LO can stand in her office waiting for her to help.

Side note: When the new law went into affect changing the risk from HUD to Lenders, HUD changed their software. The HUD website that LO's used to determine condo eligibility was changed and created a glitch in the system. The website stated that the condo was approved when in fact it was not. The same website is now used by underwriters to let them know if a condo is eligible to be requested to be insured by HUD.

Where to go from here short term? You may have to buy the house as an investment property. You may want to ask yourself if your daughter has anything in her name. You may want to ask if the lenders below can do the loan with a borrower that has no non-traditional credit programs.

Long term: Give your Daughter pre-paid credit cards where she has to put money into the card and the card maximum purchase power is the money she deposited. Not only does this help build her credit file, it teaches her that the money she puts in is all she can use to take out (like a checking account). Company's like Orchard Visa, your local credit union, Capital One offer this (some have horrible rates and fees - but it's a beginning).

You'll need to call the LO and tell them that you've started shopping elsewhere. If they don't respond by Monday, you are going to request they transfer the FHA case number to the next lender. I too will check with my Underwriter to see if they offer this program. We may still be able to use the same appraisal to help eliminate more expenses.
0 votes Thank Flag Link Fri Oct 15, 2010
Many condos in Georgia are no longer approved for FHA insured financing, same holds true for fannie mae also. Speak with your agent about searching the hud.gov website to see if that could be an issue contributing to the delay - if you are not the owner occupant of the condo the bank and FHA may be looking at your loan as if it were an investor loan. Several issues here could cause delays. Good luck.
0 votes Thank Flag Link Thu Oct 14, 2010
Nell,

I grew up in Augusta!

One issue you may face with FHA could be the status of the Home Owners Association. If several units are in default this could cause a delay or possibly denial.

At this point you should have some solid information on the loan. With Banks like Regions they are brokering the loan so they don't work with direct underwriters and loans have to pass more strict guidelines if they are going to be sold off to secondary investors. When it's all said and done Wells Fargo could be financing this loan, but most loans like this are sold to overseas banks.

I do most of my business with Wells Fargo for that reason. They don't sell their loan and they have direct underwriters which gives them more control and less red tape. Don't believe everything you hear! Wells Fargo is my top choice for Home mortgages.

My sister is one of the head loan officers at Georgia Bank and Trust in Augusta and they are probably the best around when it comes to local bank lending in the Augusta area. They also face the same brokering issues, but have a high success rate due to their volume.

Good luck and I hope that you can get some resolution soon!
0 votes Thank Flag Link Thu Oct 14, 2010
Mark, there is no reason for a loan to not close in 3 to 4 weeks these days. Our "new rules and regulations" have been around most this year and as a banker, not a broker, we do not have the delays you are speaking of. As long as people use bankers who have direct endorsed underwriters by FHA and VA, and do all the underwriting, docs and funding in house, we have closed loans recenlty in 2 weeks if the buyers get us all their info the day or two after binding contract. NO WAY should it ever tak 45 to 60 days unless your contract stretches it out that long!

You need a new lender my dear.
0 votes Thank Flag Link Thu Oct 14, 2010
Hi Nell,

I am sorry to hear of your troubles. Sounds like Regions is not a direct lender for FHA loans if your loan officer told you that your loan package is with FHA. They may have brokered the loan which means they send it to another lender for loan approval & that's where you start seeing delays. Lori is correct in that loans are not sent to FHA for approval. Your loan officer may think that by saying this, it sounds "more official" & is trying to shift the blame of delay away from her to FHA.

If there is a next time for you to buy another property or refinance, may I suggest you find a Mortgage Bank that is a direct lender. Unlike the "big four" banks suffering from the horror stories that you have heard about, loans falling through at closing at the last minute. A Mortgage Bank's operations usually run more efficiently & they will have all the processing & underwriting done in-house because that is their soul focus, closing loans.

Good luck with your closing,
Ros

Roswell Moore, CMPS
Certified Mortgage Planner
480-422-5095 direct

We are a Direct Lender, Mortgage Bank where we originate, process, underwrite and fund our own loans, on time.
NMLS ID 263779 | AZ BK 0903725
Web Reference: http://www.ezAZloan.com
0 votes Thank Flag Link Thu Oct 14, 2010
Our latest closing took a while in underwriting due to all the new rules and regulations. I tell buyers to expect 45-60 days.

Mark Lackey
Atlanta Housing Source at
Solid Source Realty, Inc.
Associate Broker
EcoBroker
Mark@AtlantaHousingSource.com
404-886-8789

Services
Home Buyers & Sellers - http://www.AtlantaHousingSource.com
Property Management – http://www.SolidSourcePM.com
0 votes Thank Flag Link Wed Oct 13, 2010
You should not be waiting this long....you should be closed by now! With the info you have provided above, there should be no issue. We do the kiddie condo programs all the times even when they are full-time students. Also, we don't send our files to FHA, but rather are delegated and licensed to underwrite in house with our own underwriters. Seems very strange that Regions would need to send the file out. I would call and write and get answers to your time delay immediately.
0 votes Thank Flag Link Wed Oct 13, 2010
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