FHA does not issue loans or approvals for loans. FHA guarantees loans made by lenders. The lenders have to document that the loan meets all their criteria. So, your lender may have issued a Conditional Approval or Conditional Qualification letter. While the variations of the possible items checked allow these letters to be wildly different, they all basically say that you are either approved to get a loan as described subject to the conditions described.
The Conditional Approval requires that you filled out a 1003 Uniform Residential Loan Application form. It will state what additional conditions apply to the approval, such as appraisal for a certain value, maintenance of current credit scores, no change in income or debts, and so on. Otherwise, the Conditional Qualification letter looks pretty much the same but does not require the URLA to have been completed.
Having said what the difference is between the only two letters the Texas Department of Savings and Mortgage Lending allows lenders to send you as a borrower, we can guess that you got a Conditional Qualification letter, not a Conditional Approval. Realtors often do not understand the difference and call them loosely by Qualification, Pre-Qualification and Pre-Approval letters, but no one knows how these 3 names relate to the 2 letters that legally can be sent.
If you received a Good Faith Estimate with a Truth-in-Lending disclosure, it is possible you have a Conditional Approval letter from your lender and the type of loan they are planning to get for you might have been identified as FHA-guaranteed, as opposed to conventional financing, VA or something else.
While FHA rules for guaranteeing a lender's loan to you are uniform across all states, except for the maximum loan amount, the lender has rules, too, and these are not uniform.
One lender may tell you that you qualify for a FHA-guaranteed loan and another one (looking at the same application) tells you, no. Yes, it is possible that that lender may turn you down, but another may say, yes. In today's market FHA is extremely popular and lenders with the ability to submit their loans for the FHA guarantee have been snowed under with business. Processing times, as a result, have telescoped out from a week last year to more than 3 weeks now. A few may be faster. Check around.
Some real estate brokerages offer space to mortgage people as a convenience. It is unlikely under ruling 96-18 that the loan officer works for the real estate broker. You are expected to check with other lenders and cannot be forced to use that loan officer.
FHA is popular as an alternative to sub-prime loans. If your credit history has some dings, conventional lenders will require so much down-payment that you can't get a house. FHA on the other hand will allow loans down into the 500s, but prefers above 580. "Work with" you sounds like you have some dings.
Last year if you could breathe with or without help, you could get a loan. Now, if your score is below 680, it is an obstacle course to get a loan.
So, get a copy of your credit report from the loan officer and as has been suggested check with other lenders by discussing your situation and score with them and sending them a copy. Ask them not to pull your credit again.

This seems to be happening more frequently because mortgage standards are continually changing and lenders are dropping like flies. Ask your loan officer what the problem actually is? You may be pre- approved for a loan but the lender doesn't approve the house. As an example if there is no plumbing you can't get an FHA loan. Check with a different lender. If you need a recommendation, please give me a call.

Carol Ann Pease, ABR, CRB, CRS, e-PRO, GRI

Amber....good question and difficult situation. I'd like to recommend a really good loan officer to work with you and shoot straight with you. I think you want to get this resolved ASAP before you spend any money on appraisals, inspections, option money and the like that is non-refundable. It doesn't sound right that your broker is shopping around your loan. The loan officer I typically work with will shoot straight with you from the beginning and I think that's important.

I didn't know that we could put names and numbers on here or otherwise I would have done so. Guess that's what I get for not reading the posts. So sorry! The loan officer I'm referring to is William Crawford, Home Loan USA. His number is 817-379-4241 or e-mail him at William.Crawford@homeloanusa.com Sean and the others are exactly right when they said it appears that you need someone with more experience handling your FHA loan. It could also not just be the loan officer's fault, he/she could have an inexperienced underwriting team. The loan officer is only as good as his underwriting team. Hope this helps! Thanks!

Quick question, because I want to make sure that I understand correctly... Are you preapproved or prequalified? Once you are preapproved they shouldn't be talking about your credit scores, etc. as this has already been taken care of. They will run your credit and verify your employment one more time before they close the deal. If there are any changes you could have an issue at that point. If you are still having issues and are unsure, send me a quick e-mail to me jackie@texasindependentrealty.com I will hook you up with the best FHA loan officer in the business (in my opinion). I have seen him get deals done that no one else could even touch, because he knows the rules and regulations inside out. I will send you his name and number. No hassle from me, just a name and number to help you. Thanks and good luck!

I like many others recommend that you shop around for a second or even third opinion on your loan. With FHA loans low credit scores are not taken into affect. Instead they look at your recent credit good or bad. I have closed transactions for some folks with not so great credit. If you just have one derog on your credit then you more than likely are A OK. Talk with the other lenders in and around your area. Ask them how long they have been in business and another good question in my opinion to ask is in the last 5 years have many sub-prime loans did they write? This in my mind answers a key question are they out to help you or their pocket books. A few is ok, many more than that and i would move on. Another place to look is with a mortgage banker. (Chase, Countrywide, etc...) Bigger institutions underwite their own loans and don't send them off to other companies to approve. Lastly, if you cannot find someone that will not help out... Feel free to give Cathy Kingery a call... She can answer all your questions regarding your FHA eligibility and what to look for/watchout for. 503-681-2744 or e-mail her at Cathy.Kingery@chase.com she is a world of knowledge and has 27+ years working with these smae FHA/VA loans

The problem is one of two issues.

The bad news is that you should consult with another lender... such as Luke Allison I mentioned below.

The good news is that one of the problems Luke can most likely resolve; perhaps he can solve the other as well if it is present.

the letter talks about how we are preapproved for this much and have to put this much down. at the bottem it says approval depends on spending, and credit scores. it practally says that if there is no big changes we should get the loan. So i still dont understand why he said what he said

Sounds like your loan officer is a mortgage broker and he's shopping your loan around to various providers trying to find a fit. FHA used to be a much smaller percentage of our business than it is right now. For the last twelve months, FHA and VA loans are almost all my buyers are doing. And, FHA loan processing experts are very overworked people right now. I would check with another loan officer who handles a lot more FHA loans. I heard Rodney Anderson of CTX Mortgage on the radio on Saturday on 105.3FM talking about how their percentage of FHA business has more than doubled in the last year, where 5 years ago, it may have only been 20-30% of their business. Don't let the loan officer wait until the week of closing for you to discover you don't get through Underwriter Approval on your loan. Press the issue with them now or move to someone who can give you a more definitive answer. Local lenders with local processors and local underwriters will not drag out this process and will be the most likely to get you closed on time.

Lending suggestion:

It's difficult to tell from your post what the problem may be. At first read it sounds like perhaps you had just a pre-qualification, but you mention the "letter thats underwritten"... is this by chance a Conditional Approval (aka Commitment Letter) from the lender's underwriter? If so the problem should be easy to identify.

I *think* I can guess what the problem might be from the second clue. If I'm correct, there is another Trulia member who can help... use the "Member Search" to find Luke Allison of Flagstar Bank. Give him a call and have the underwriter letter handy for him to review.

Good luck and don't give up!

There may be only one company that this broker is signed up with that will work with you. There may be other lenders....
For example: Many lenders cut off approvals at 580 FICO scores. Some will go lower.
It would be important to know WHY this loan offices thinks that there is only one lender that will work with you.
If you aren't satisfied with that answer, seek a better loan officer.

Good luck. I know this is stressful, and it doesn't help to have a below average loan officer handling things. But by asking the right questions you should sleep better tonight.

we havent heard anything as of yet about the offer, i also was thinking this is a weird statement. The only thing they see a problem is the repo we have, but we had that on our record when they pre approved the loan. So i dont see why its a problem. I've heard of people with way more on there credit getting the loans.

That's a weird statement since FHA has the same guidelines no matter what lender you use. They insure the loan. Do you have other issues with your financial situation? Did they accept your offer? I suggest that you keep looking so you have a back up in case this one doesn't work out.

Naima

Ask what the problem is. Ask why were you approved if your credit was no good. Did you ask about the YSP? Next time you should work with a direct lender, especially if you are buying an REO. Good luck and don't pay YSP!