FHA mortgage approval with negative transactions on bank account?

Question

Any experienced mortgage professionals out there? I’m new and have a buyer who is just about to close on a home with a 30yr fixed loan. (FHA) Everything was fine until we requested updated bank statements. There are negative transactions in his account. He says it was a one time occurance. This file was manually underwritten for another issue. Do you all think we have to worry about the negative charges to her account if they are not habitual? Let me know as I just picked up the statements from him and would like to be prepared for the morning when I submit. Or should I just go ahead and set the customer's expectations that he will not be buying a home with us?

Answer 1

if he had negatives they should've done a VOD and not turned in bank statements.



this is really up to the U/W, and the DE U/W can say Yes or No.....there are other factors look at...



credit score, loan amount, DTI, if it was gift funds or personal, etc

Answer 2

When I was underwriting, I was a DE underwriter and ANY negative amounts/returned checks, was grounds for a turn-down.



You should be very, very concerned, b/c it demonstrates that he/she is spending every dime they have, and if they are going UP in payment (rent vs new mortagage payment) that is at high-risk for first-year default.



Just remember the first-rule of FHA....protecting the buyer...too many underwriters forget that and Loan Officers treat FHA like it's an alternative to subprime...that isn't what FHA was designed to do.



If you had to do a manual underwrite for 'another issue' then you now have TWO layered risk factors.



That would get a thumbs down from me.



I would prepare the customer now that it could potentally kill his deal.



The underwriter is probably going to turn it down for that reason b/c if FHA won't insure it after it's underwritten and closed, that is the MOST expensive buy-back that a lender makes, so if you can't justify it 6-ways to Sunday, no way, no how. That is in ADDITION to HUD keeping a rating on the underwriter that will follow you with any lender, when you have DE loan authority....no underwriter is going to put their job at risk like that.



PS: You can't do a verification of deposit (VOD) form on an FHA...for those that don't know...not allowed. Full bank statements, all pages, must be in the file.

Answer 3

I am not a professional at all. I would be worried about ANY negative transactions on anyone account. What about the person's overall credit rating. Your buyer needs to explain that bank stuff in detail, it may NOT be a one time occurrence.

If I were holding the mortgage, I think I would pass on this person, esp. if I wasn't happy about the explanation given for why it happened. Sometimes one can write a bad check as we all have made addition/subtraction errors, but this is NOT a good sign. Any lawyer you can contact about this???

Answer 4

FHA loans are the easiest type of real estate mortgage loan to qualify for. The FHA guidelines for loan qualification are the most flexible of all mortgage loans that require less than 5% down payment.



Following is the basic FHA loan qualification guidelines.



Two Years of steady employment, preferably with same employer.

Last two years Income should be the same or increasing.

Credit report should typically have less than two thirty day lates in last two years.

Bankruptcy's must be at least two years old, with good credit since.

Foreclosure's must be at least three years old, with good credit since.

Your new mortgage payment should be approximately 30% of your gross income.

These are some of the most basic of FHA guidelines for qualifying for a FHA loan. If you have answered yes to most of these statements, you probably qualify for a FHA mortgage loan.

Answer 5

sounds like a under qualified borrower

Answer 6

Need more details

Answer 7

that's a tricky question

Answer 8

What is the hurry, wait and see if he/she is approved!

Answer 9

?