Home Buying in Daly City>Question Details

Sean, Home Buyer in Daly City, CA

Denied by underwriter after even if huge downpayment

Asked by Sean, Daly City, CA Sun Feb 17, 2013

Hi there,
So here is my situation. The underwriter denied my loan simply because I have a foreclosure record almost 4 years ago. I have reestablished my credit to the 720's. Send in all the paper work and my lender even mentioned that it was going to be a very smooth process. I mean, I am even willing to put down 75% of a down payment for the property that I am trying to buy. Trying to buy a home in Northern Cali. for the price of 570K and I am willing to put down a 450K-460K for a down payment.. I just desperately need a 130K loan. So what should my next step be after being denied? Should I shop around at other banks or just wait until I get my foreclosure record fully removed? I do want to purchase a home ASAP for my family but now..seems like I don't think I will get approve.

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Shane Milne’s answer
FHA doesn't have a requirement to be a first time homebuyer, that is just a myth because a lot of people who use FHA financing to buy a home happen to be first time homebuyers.

Sounds like the loan officer at PNC was essentially an order taker, couldn't think on their own. Sorry you ran into someone like that, unfortunately a majority of the loan officers in the mortgage industry are similar.
0 votes Thank Flag Link Sun Feb 17, 2013
Sean. The problem is most likely how the FNMA automated underwriting is decoding your previous foreclosure.
What I have seen is that the foreclosure happened five years ago but the trade line may have had more recent activity.
The credit bureaus are unable, at the moment, to code the last activity date so as not to,start the time line all,over again.
You may be able to get this through on a manually underwritten FHA loan.
I am in Fremont if you would like to discuss.

Cgravelle@ diversifiedmg.com
0 votes Thank Flag Link Sun Feb 17, 2013
Thank you all for the response. It is greatly appreciated. I applied through PNC Mortgage for a conventional 30 year fixed...I honestly thought that I was going to get approved since well, my lender was very upbeat and optimistic that it was going to go through. I guess my advantage was that I was going to put down a huge amount of down payment and plus my credit has been also reestablished. But now looks like I will have to go with the FHA option. Can I even get qualified for FHA since I am not a first time home buyer?

0 votes Thank Flag Link Sun Feb 17, 2013
Shane is correct. If you're trying for anything conventional, you'll be within the 7-year window and the foreclosure, barring the very rare exception, will stop you from obtaining approval. If you conver to FHA, you should be OK, and if you go FHA with that loan-to-value (LTV) on a 15-year fixed program, you will also avoid monthly mortgage insurance (for a little while longer).

If you have questions or want to take a closer look at a fast pre-approval and conversion, just let me know.

Rob Spinosa
RPM Mortgage
0 votes Thank Flag Link Sun Feb 17, 2013
Sean, what type of loan were you trying to qualify for? Was it a Fannie Mae or Freddie Mac loan program? If so, then that could explain why you were denied, because foreclosures require 7 years for those loan programs (an exception at the 3-year mark can be made if the foreclosure was due to extenuating circumstances, i.e. medical, death of a wage earner, etc.).

However FHA financing just requires 3 years from the foreclosure date & at least 12 months of re-established credit. Have you spoken with your loan officer regarding if you can apply for FHA financing? If so, what did they say?

Shane Milne | Lending in all 50 states | NMLS #81195
shane@thebesthomeloans | 949-273-4161 direct
0 votes Thank Flag Link Sun Feb 17, 2013
Hi Shane,

MY lender, unfortunately, hasn't mentioned about FHA. I just found out about FHA after I was denied.
Flag Sun Feb 17, 2013
Don't waste your time at the bank go for sellers financing.
0 votes Thank Flag Link Sun Feb 17, 2013
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