Home Buying in 21225>Question Details

Brilyn11, Home Buyer in ,

Thoughts about why Wells Fargo denied my fha loan?

Asked by Brilyn11, , Tue Nov 27, 2012

I was preapproved for an fha loan through Wells Fargo. I was approved through the auto underwriting system. I was then denied by the Manuel underwriter because of the following: I was paying rent of 1300.00 for 13 months however, 3 months ago the landlord informed us that he is letting the home go into foreclosure and he lowered the rent to 650.00. The lo said they denied me due to the fact I am to currently paying 650.00 in rent (they wanted to make sure if I could pay 1300.00 and save for down payment then I could afford the estimated mort.). so no fault of my own for my landlord lowering the rent, I am now denied even though I could prove I paid 1300 a month for 13 months before with the same employment..they said since I have been paying 650 for the past three months I am denied bc that's less than the predicted mortgage...wth?.. They wasted 3 weeks of my life and I am still under contract and now have to go with a broker to try and get it in time for the closing.thoughts?

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Hi Brilyn

I am assuming your DTI (Debt to Income ratio) went up or something popped up on the credit. I would recommend you obtain a second opinion from another Loan officer.

Good luck
0 votes Thank Flag Link Tue Nov 27, 2012
Get together with your agent and notify the broker if necessary, so they can help you find a new lender and salvage your contract. I've had buyers turned down at the last minute; I mean a day before settlement!! We had to put them in touch with a new lender...get the FHA case # transferred...blah blah...I was the sellers agent at the time, but we worked it out. MOVE QUICKLY and find another lender to work with. The resources below may work, or see who your agent knows that can handle a switch like this.

Be patient and know that what's for you, is for you! Get to work on your solution RIGHT AWAY! The contract says "time is of the essence" and in times like this, that couldn't be more true.
0 votes Thank Flag Link Tue Nov 27, 2012
Getting a loan is a super complicated process and the reason could be even beyond what they've told you. I hope you still get the home you want. The reason stated makes no sense at all. If you weren't already past it, I would follow up with the Branch Manager.

Sadly there are good loan officers and bad ones, good real estate agents and bad ones. Years of experience while useful is not always a good indicator of their prowess at their job. Sounds like your realtor is being aggressive in pursuing other avenues so you don't miss you.

Best of luck to you.
0 votes Thank Flag Link Tue Nov 27, 2012
Thanks Greg I appreciate it. I'll get you the answers you need Brilyn. I can't promise a yes but I will work very hard to get you a yes or now as quickly as I can. Everyone and everything I need is here in my office. This isn't like Wells Fargo.
0 votes Thank Flag Link Tue Nov 27, 2012

You need to get a second opinion...give Brent Mendelson a call. He can fix this for you.
0 votes Thank Flag Link Tue Nov 27, 2012
Have you considered going with a mortgage broker? What state are you in ?
0 votes Thank Flag Link Tue Nov 27, 2012
WOW that is one heck of an interpretation of the rules. It's called payment shock in the industry but FHA is more lenient on this that conventional. I mean FHA is used all day long by borrowers who are living at home with their parents and have NO history of paying any rent.

If you would like to speak directly please let me know. Payment shock has been used in the industry as almost a generic reason for denial. Credit and DTI will come into play also. Loans are usually denied when there are several adverse factors. Is there anything else with your loan profile that would cause the denial?


Brent Mendelson
Senior Loan Officer
1ST Mariner Mortgage
Lending in all 50 states
0 votes Thank Flag Link Tue Nov 27, 2012
Yea doesn't make sense at all bc I showed I could pay 1300.00 a month but they didn't want to accept that.. It's ok though they will lose my business. I don't want to take out a loan and do business with a bank for 30 years that does this to their customers anyway..
0 votes Thank Flag Link Tue Nov 27, 2012
The use a formula we refer to as " Payment shock". Sometime this stuff just does not make sense.
0 votes Thank Flag Link Tue Nov 27, 2012
Try Shawn Jenson of Carrolton Mortgage 4104277266 He may be able to help you.
0 votes Thank Flag Link Tue Nov 27, 2012
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