My husband and I have been approved for an FHA loan of $193,800/6.5%/$10,000 down and we just received the mortgage commitment. They have asked for copies of paystubs and bank statement, etc. They also asked for proof that a judgement and tax lien had been paid (they were on my credit report). I expected this and have provided them with the proof. I have two outstanding collection accounts unpaid on my credit report that they have not asked for proof that they have been paid: $500.00 owed do a dentist from 1996 $50.00 Misc collection account from 1999 Does anyone know why they haven't asked for proof? We close on the 25th and I'm afraid they will call me on the 24th for proof. I know they have seen the items because when our mortgage broker called us to go over the credit report he mentioned them. Does anyone have any ideas why they haven't asked for proof of payment? Thanks in advance.
I don't know. Maybe you'll get lucky but, I'd have my checkbook at the ready just in case they do require you to pay at the last minute.
Jen, I've been considering trying to get an FHA mortgage and I was curious about the process. Was it difficult to find a seller who accepts FHA? What were your scores like? Anyway, you don't have to answer if these ?s are too personal. Thanks!
It has been one of the easiest things I've ever been through (so far!). Both my husband and myself have credit scores ranging from 620-680. We used a mortgage broker who has been wonderful. I have learned so much about the FHA process from this message board that he was surprised at all of my knowledge! We were in a time crunch to find someplace because we were not planning on buying so soon, but our landlord called us and told us he was selling the condo we live in and that we have 60 days to move. We only looked at 3 homes and the first home we looked at turned out to be the one we are buying. They know we have an FHA loan and they had no problem. A guy I work with just bought a house and he was turned down for the first house he bid on because he was FHA. Hope this helps!
We had an unpaid chargeoff and a couple of collections when we applied. They just wanted a letter about what happened. Since then the stuff has been removed but oddly enough they did not even seem to care about it. I flat out said there was no way I would pay for stuff that is not mine and they never pushed it. the only thing they cared about was an unpaid judgement on the report that had actually been paid before it even became a judgement. They made us wait until it updated on the credit report and then we were good to go.
I just got off the phone with my Mortgage guy and got final approval on a FHA loan today. It sounds like you have just started the process. You won't know what exactly the underwriter will require until you get final approval. That means the underwriter has looked at the file and told your mortgage broker what they will require. FHA seems to depend on which underwriter you have. The guidelines with FHA say no outstanding collections, period. However, I have seen many posts on here where people have gotten approved without paying small amounts. You may have to pay that $500 collection but you may not. You really won't know until you get final approval. Final approval for me took one week. They are really behind in my area and using temp underwriters. My broker actually got one fired on Friday due to the delays on the sale of our home but thats another story. I would find out when they expect to have final approval and then you will know for sure what will be required.
I am a mortgage banker in NY. What happens in most cases is when we do an FHA loan or any loan for that matter, we first try to approve it through automated underwriting. On an FHA loan if you have an approval through Freddie Mac automated underwriting then charge offs and collections do not have to be addressed. We do not need even an explanation letter. Public records such as liens and judgements do need to be paid however. But we don't need to explain them once they are paid. The automated approval still has to be reviewed by the underwriter, however, they are not liable for the credit decision and are given a waiver from HUD concerning the credit report. So most underwriters feel more comfortable having the automated approval. They are still responsible to validate the loan file for accuracy but alot of the normal conditions are waived on these loans. When a loan can not be approved via that method and manual underwriting is used, then they would normally ask for these items to be paid. Except for collections and charge offs of $100 or less can be left open.
Thank you very much dimitri! My broker did say that we were approved through the automated underwriting. Thanks again!!
Jen4571 Did you guys get the house? have not seen a post regarding that. Going to similar situation with VA loan in process but have 3or 4 collections.
The post by the mortgage broker hit the nail on the head. The second side of the question is yes, there are seller who will not accept FHA Loans. This is because the aprraisal process is more stringent for a FHA loan than for a conventional loan. Mike G.
