Home Buying in Spearfish>Question Details

Maisies Mom, Home Buyer in Spearfish, SD

Our loan was approved by the automated Fannie Mae Freddie Mac system, but the underwriter denied it anyway?? Why?

Asked by Maisies Mom, Spearfish, SD Thu Oct 7, 2010

We were working with a bank and up until 3 days before closing our LO kept saying yep, its great, go ahead and sell your house trailer to help with closing costs, (which we already had). So we sold our trailer and they backed out on us. We quickly switched to Wells Fargo and our loan is in underwriting again. At the other bank, they said it was approved by the Fannie Mae Freddie Mac system so I don't understand why it wouldn't work. What are the chances the same will happen this time? We got a better interest rate with Wells Fargo and they found other programs we can benefit from but I'm so worried. We've been this far before and if it falls through, we're pretty much homeless because we took the advice of the first broker. I don't think we can file another extension on the house.

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This is why it is so important to use a loan officer from an established lending institution and one who has experience. I had a loan fall apart last year. It was a young lender, new in the business and he had used a quick verification without all of the required documentation. Wells Fargo in Sioux Falls is where I send all of my buyers. My team of lenders are sharp, have been in business for years and know exactly what to do. I have never had one fall apart.
0 votes Thank Flag Link Fri Nov 12, 2010
I see this happen when you have an inexperienced LO. But in all fairness - real estate lending is changing daily. If Wells Fargo says it will close - I'm sure it will. Follow all of Wells Fargo's advice to you. Kathy Whitelock, RE/MAX In The Hills
0 votes Thank Flag Link Thu Oct 7, 2010
Hi Maises Mom,
Automated approvals do not verfy the information you provided so you were only pre qualified. The next step is the verificaton phase to get you a loan commitment or pre-approval; that's when all the information you provided is checked out. So there must have been something in the information you provided that did not satisfy the underwriter.

I have also seen underwriters reject applications due to home conditions of either the home being sold or being purchased due to issues that may be relevant to the loan product being used.

If you are now with the local Wells Fargo they will do the best they can. You can see my interview with him about the pre approval process by visiting our web site http://www.keene-team.com and click on Videos. Go luck . John Keene
, Broker Owner


Deadwood SD
Web Reference: http://www.keene-team.com
0 votes Thank Flag Link Thu Oct 7, 2010

It would appear that the reasons for the underwriter denying your loan would be vital information. We recommend making a concerted effort to access this information. It may help you to avoid another disappointment.

There are any number of reasons why an underwrither may take a position of "denial" .....it's important that you seek this clarification.

Good luck,

0 votes Thank Flag Link Thu Oct 7, 2010
The automated underwriting system is only a system to screen loan information input into the loan origination system.

All of the details then have to be documented by a underwriter before the loan is formally approved, conditioned or rejected.

It is possible that the information input originally was not correct, or mis typed. It is also not out of the realm of possibility that the guidelines changed in the short time between one lender and the next.

Also - underwriting is as much an ART as science. One underwriter may take a completely different approach than another. I hope this makes some sense!

Good Luck!

If you like the answer - please consider making it a "Best Answer" !

Gerard Dunn
Associate Broker
Licensed in Maryland, Virginia and Washington, D.C.

Assisting Homebuyer's and Seller's for 28 years
0 votes Thank Flag Link Thu Oct 7, 2010
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