Gustan Cho The Mortgage Expert,
Publish On: August 30, 2021
This Article Is About How To Get AUS Approval With Late Payments After Bankruptcy
Most lenders will not accept any mortgage applicants with late payments after bankruptcy and/or housing event (foreclosure, deed in lieu, short sale). Late payments after bankruptcy are frowned upon by mortgage lenders. It is possible to get an approve/eligible per automated underwriting system (AUS) with late payments after bankruptcy but will not be easy. However, many lenders will not approve borrowers with late payments after bankruptcy with late payments.
Lenders refer to borrowers with late payments after bankruptcy as second offenders and most of them do not want anything to do with them. However, borrowers can get AUS Approval even with Late Payments After Bankruptcy and Foreclosure. Gustan Cho Associates has no lender overlays on late payments after bankruptcy. As long as borrowers can get an approve/eligible per automated underwriting system (AUS) with late payments after bankruptcy, Gustan Cho Associates will approve and close the file. We have zero lender overlays on government and conventional loans.
Gustan Cho Associates will just go off the automated findings of the AUS and do not have any other overlays. In this article, we will thoroughly explain on How to get AUS Approval with derogatory tradelines after bankruptcy and/or housing event.
Agency Guidelines Versus Lender Overlays
Lenders have two different sets of lending requirements:
Agency Guidelines:
- Must meet minimum agency guidelines (FHA, VA, USDA, Fannie Mae, and/or Freddie Mac)
Most mortgage companies will have additional lending requirements above and beyond agency guidelines called lender overlays.
How AUS And Lenders View Late Payments After Bankruptcy Or Housing Event
Both Automated Underwriting System (AUS) and mortgage lenders really frown upon borrowers with any late payments and/or derogatory credit tradelines after bankruptcy and/or foreclosure. AUS Approval with late payments after bankruptcy and/or foreclosure is not easy but not impossible In this blog, we will advise on how to get AUS Approval With Late Payments After Bankruptcy and Foreclosure.
What If Lender Will Not Accept Borrowers With AUS Approval With Late Payments After Bankruptcy
Automated Underwriting System (AUS) is a very sophisticated automated system that analyzes borrowers’ credit and income profiles within seconds. Gustan Cho Associates Mortgage Group has no overlays on government and conventional loans. We just go off agency guidelines and do not have any additional overlays. So if borrowers get an AUS Approval With Late Payments After Bankruptcy and Foreclosure, that borrower is set to go and will close their loan as long as they can meet the conditions of AUS.
Other lenders with mortgage overlays will still need AUS Approval but will have a second set of lending requirements called overlays. Over 90% plus of lenders with not accept borrowers with AUS Approval With Late Payments After Bankruptcy and Housing Event. Lenders are allowed to have higher standards than agency guidelines. Not all mortgage lenders have the same lending guidelines on FHA, VA, USDA, Conventional Loans.
Just because one lender says no on FHA Loans, may not mean that other lenders will not say yes. Over 75% of our borrowers are folks who got turned down by other lenders due to their overlays.
Fannie Mae Versus Freddie Mac Automated Underwriting Systems
There are two types of automated underwriting systems:
- Fannie Mae DU AUS
- Freddie Mac LP AUS
Most lenders use Fannie Mae DU Automated Underwriting System. However, there are times when DU Findings will not render an approve/eligible per AUS but Freddie Mac LP will render an approve/eligible. Freddie Mac LP is mortgage tolerant with late payments after bankruptcy and/or foreclosure. Both Fannie Mae and Freddie Mac AUS frowns on late payments after bankruptcy and/or housing event.
Although most lenders will not accept borrowers with late payments after bankruptcy and foreclosure, there are lenders like Gustan Cho Associates that will accept borrowers as long as they get AUS Approval With Late Payments after bankruptcy and/or foreclosure. There are ways of getting AUS Approval with late payments after bankruptcy and/or housing event.
Solutions To Get AUS Approval
Just because loan officers get a refer/eligible per AUS does not mean that we can get the refer to approve/eligible per AUS.
Let’s take a case scenario on a recent borrower who had late payments after Chapter 7 Bankruptcy:
- The borrower has a 680 credit score.
- Had 90 days late payments on student loans two years after bankruptcy.
- Has timely payments on all of her debts for the past 24 months.
- Has approve/eligible per AUS Findings on FHA loans.
- However, need a conventional loan due to the purchase price being $400,000 and need a higher loan than FHA’s $356,352 maximum loan limit.
- Cannot get an approve/eligible per DU Fannie Mae AUS even with a 10% down payment.
- Ran Freddie Mac LP AUS with a 5% down payment but got refer/eligible per LP AUS.
- Ran Freddie Mac LP AUS with a 10% down payment and got approve/eligible.
The above case scenario shows how strict AUS Findings is with late payments after bankruptcy. It also shows how Freddie Mac LP AUS is more tolerant than Fannie Mae DU Findings.
Finding Direct Lender With Overlays
Just because borrowers cannot get AUS acceptance with Late Payments after bankruptcy and/or foreclosure does not mean that they automatically qualify with all lenders. As mentioned, most lenders have a two-tier approval system. Meeting the agency guidelines and they have their own overlays. Gustan Cho Associates Mortgage Group does not have any overlays and we just go off AUS Findings. NO OVERLAYS. Home Buyers who need to qualify for a mortgage with late payments after bankruptcy and/or housing event can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com.
The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays. We have a national reputation for being a one-stop mortgage shop. Over 75% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to their lender overlays. We are also experts in Non-QM and alternative finance loan programs for owner-occupant homes, second homes, investment properties, and commercial loans. We are a national mortgage company licensed in multiple states and offer mortgages one day out of bankruptcy, Non-QM Jumbo Mortgages, Bank Statement Mortgages, Asset-Depletion Mortgages, fix and flip loans, and P and L stated income mortgages.
