What is our next option since the lender seem to not really tell us much?

Asked by Aera715, Long Beach, CA Mon Feb 11, 2013

Pre-approval for a VA loan came back refer eligible. Short sale final in Nov 2009 and BK in Sep 2010. Underwriter mentions late school loan payments after BK.

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Mon Feb 11, 2013
Ask your lender if they ran it under Fannie Mae's DesktopUnderwriter (DU) or Freddie Mac's LoanProspector (LP)? LP gives much more favorable underwriting decisions for VA loans than DU does... so if they haven't tried LP, tell them to do so. If they don't have LP (most people use DU and not LP) then you should try a lender who uses LP (we use both DU & LP).

You can also have your loan officer fiddle around with the scenario/run hypothetical situations - such as a lower sales price (to reduce the debt to income ratio), increasing the amount of financial reserves you have (savings, checking, 401k, etc.), paying off debt (again, reducing the debt ratio) or even trying with a small down payment (3 to 5% down). I recently had a VA loan where both DU & LP were giving it a "Refer", so I added 2 months more reserves and it came back as "Approve" so that is what my clients goal is... saving up some more money.

However getting a "Refer" doesn't mean an automatic denial, it just means the underwriter cannot use the automated underwriting system to assist them with approving the loan. They have to manually apply VA's guidelines to determine if you are approved.

If the underwriter has already reviewed it, and cited that the student loan payments after the BK is the reason that they can't approve it... I'm not surprised, as the BK was just a little over 2 years ago and if you have late payments after a BK, usually you have to wait at least 12 months and potentially up to 24 months since the most recent late payment (basically the underwriter applies the BK seasoning requirement to the most recent late payment).

Shane Milne | Lending in all 50 states | NMLS #81195
shane@thebesthomeloans | 949-273-4161 direct
1 vote
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Mon Feb 11, 2013
Aera - did you ask your lender if they can run LP?
0 votes
He hasnt respond back yet. My husband had 3 90+ days late payment and waiting back to hear of the school will remove the late out of goodwill. But worse case i wasnt sure how long i have to wait. Lender has been submitting thru DU since oct 2012 and each month since. Keeps coming out refer eligible.
Flag Mon Feb 11, 2013
Tim Greaves, Agent, Long Beach, CA
Mon Feb 11, 2013
Get another lender. Try Phillip Picou, 951-239-5051. He is local, in Long Beach and will tell you exactly what is what.
0 votes
Lesley Harris…, Agent, Huntington Beach, CA
Mon Feb 11, 2013
Hello Aera,

The information you profided is very vague. My gut, and 15 years of experiance says to find another home. If it's a short sale, it was subject to bank approval, so you should be able to get your full deposit back. However, really need to see the contract to really say. Your agent should be able to sit with you and discuss all of your options.

Best of Luck,
Lesley Harris, Realtor
Cal Tex Properties & REO's
(562) 673-0943

0 votes
In clarification, my husband and I had finalized our short sale in 2009 and a BK in 2010. We have established our credit with over 620 and seeking a VA pre-approval but it came back refer eligible. It went through DU and then the manual underwriter says the only thing that may be an issue is the late payment on a school loan in 2011. We haven't found a home but are looking for one. But because of the loan, does that mean we have to wait another 2 years to pre-qualify?
Flag Mon Feb 11, 2013
Mark Correll…, Agent, Huntington Beach, CA
Mon Feb 11, 2013
You need a lender that communicates with you. I have one preferred VA lender that does them all the time - up to 4-units owner occupied. They have never let me down, and always communicate throughout the transaction. They are a direct lender bank, yet not so big that files get lost in the shuffle. Here is their info.:
National Bank of Kansas City - Dan Rader
(913) 383‐6475 (direct) (913) 529‐3009 (fax) (913) 744‐7359 (cell) (800) 375‐8096 x 6475
0 votes
, ,
Mon Feb 11, 2013

Underwriters are very hesitant to manually underwrite a refer eligible with late payments after a bankruptcy.
Underwriter will usually suggest 24 months of clean credit after the last reported late payment.
Refer eligible requires a manual underwrite.
Your ratios MUST be 34/43 MAX.

There are lenders who will do this loan.
I can not, but do have a name if you would like that person.

0 votes
Michael Magaw, Agent, Torrance, CA
Mon Feb 11, 2013
You need to communicate with your lender. Tell your lender that you have questions that have not been answered.
If you cannot get your questions answered, then tell him that you to work with another lender.
I can refer a good VA lender to you if needed.
0 votes
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