What should we do?

Asked by Ellie_grzesik, Utica, NY Sun Sep 4, 2011

We were called a week ago saying that we would be closing this week. Our bags and boxes were packed and we were anxious to move in before my daughter started kindergarten. The bank says everything is going great and real smooth and not to worry. We turn in all our paperwork asap and we had the committment letter too.

The underwriter's boss won't let us get an FHA mortgage because he doesn't have enough credit history from the past 2 years. He lived with his parents and paid cash for his phone, his car, and rent (to his parents), and he wrote a letter stating why he didn't have proof of those things paid. He didn't have student loans because he paid with cash but for the past 8 months he paid off a 1000 dollar ring (payments larger than asked and on time) and he has a $500 limit on a credit card and we use and pay off every month on time more than asked for.

We can't get a loan without a co-signer and we can't find one.... Do we change banks? What do we do? Need to move ASAP!

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Cathy Sloan, Agent, Jacksonville, FL
Sun Sep 4, 2011
I am providing FHA guidelines from the government web site. I am cetainly not a loan officer or an underwriter however you might check with othermortgage lenders in your area. The guildlines below sound as though 12 months or non-traditonal credit may be acceptable. It sounds as though the boss referred to is FHA and that FHA will not insure the loan. You might try finding a mortgage broker as oposed to a Bank, as mortgage brokers have more resources and can shop a multitude of banks.

FHA stipulates that you the borrower must have 3 credit references from 2 groups of non-traditional credit sources.

Group 1 - The first group of references is weighted more heavily than the second because it is considered a more accurate predictor of your credit worthiness.

Group 1 consists of rental housing payments, utility payments (gas, electric, water). Also included are telephone, and cable TV bills.

Group 2 - FHA qualifications are possible by including payment references such as: insurance payments (medical, auto, life, renters ins), payment to day care, internet cell phone, a 12 month bank documented history of deposits resulting in increased balance. Group 2 also accepts individual loans where the repayment terms are written out and signed by both parties.

FHA Rules for Non-Traditional Credit

To qualify for an FHA loan with non-traditional credit you should have 3 positive credit references and at least one being a group 1-credit reference. To be accepted under FHA qualifications you must display - in summary:

- No late payments on rental housing (group1)
- No more than 1- 30 day late on other payments (group1)
- No collection accounts (other than medical) in the last 12 months.

Good luck to you.
Web Reference:  http://move2jacksonville.com
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