This ARTICLE On Lender Overlays Scenarios On Government And Conventional Loans
Gustan Cho Associates Mortgage Group has been busy during the spring and summer seasons of 2021. We are excited we had the opportunity to help as many clients as we did and are helping more clients every day. In this blog, we will detail a few recent success stories for difficult loans we were able to close. Story’s such as these are a common occurrence at Gustan Cho Associates.
About 75% of our clients have been turned down by other lenders. We are experts in mortgage financing without any LENDER OVERLAYS to get in the way. Gustan Cho Associates has a national reputation for not having lender overlays on government and conventional loans.
Lender Overlays Scenarios On VA Loan With Over $40,000 Of Medical Collections
Recently we had a client who was involved in back-to-back major car accidents with many unexpected bills (medical bills and other accident-related bills). New medical collections kept popping up and popping up on her credit report. These medical collections caused the credit score to drop all the way down to 552 from 715.
We were able to close the VA mortgage with 100% financing even though the credit score was low. There were over $60,000 in medical collections that showed up in just the past few months. They were many NON-MEDICAL collections older than 12 months. We were able to utilize the new credit supplement rule and verify that no payment plan was put in place for the non-medical collections. Of course, medical collections use a zero-dollar payment per VA guidelines.
Please see our blog on VA COLLECTION GUIDELINES for more information.
This client was turned down by two other lenders due to their credit score and medical collection balance is being too high. However, the decision from the other lender was based on overlays and the HUD guidelines. Per HUD guidelines, there is no minimum credit score requirement for VA loans. Our client was incredibly happy we were able to close this loan for her in a short amount of time.
Lender Overlays Scenarios On FHA Loan With Active Current Chapter 13 Bankruptcy
We close FHA mortgages with an active chapter 13 bankruptcy all the time at Gustan Cho Associates. We are experts in manual underwriting FHA loans when currently in a chapter 13 bankruptcy OR less than two years from the chapter 13 discharge. This example is being written about due to the issues during the trustee’s approval.
If you are in an active chapter 13 bankruptcy, your trustee must sign off on your loan terms before the underwriter can approve the FHA loan. This trustee was located in Cook County, Illinois. After a review of our pre-approval and mortgage fees, the trustee told the client they would need to extend their chapter 13 bankruptcy in order to be approved for this new mortgage debt. Our client had to make a decision based on the very specific rules from the trustee. In this particular case, our client had about 2 years left on chapter 13 repayment.
At the time of this trustee review, the trustee learns about a substantial raise the client received from his work. In order to sign off on the new mortgage debt, the trustee extended the bankruptcy repayment 12 more months due to this raise.
This trustee also added some very specific qualifications (see below):
Qualifying For Home Loan With Bad Credit
An example of one of these qualifications was; the principal and interest payment may not exceed a payment of $1212.13 (then add taxes, insurance, and mortgage insurance). This was a strange approval from a trustee, one we have not seen in the past. In this situation both the trustee and the client were happy. The trustee was able to pay back the creditors based on the higher income and the client was able to obtain a new home for their family, in the school district they needed to be in for their children. Due to the price of the property in the area, the client said it was worth extending his bankruptcy for 12 more months in order to obtain this property.
We are writing about the situation because it is unique. For the most part, the trustee does not change the bankruptcy repayment agreement. But in this situation due to the new financial information, that was the only way they would sign off on the new mortgage.
Please see out the blog on TRUSTEE APPROVAL TIPS.
Living With Family And Verification Of Rent
Verification of Rent (VOR) is a requirement for all manually underwritten mortgage loans. The underwriter must verify on-time rent payments for at least 12 or 24 months (depending on the loan program). If you rent directly from a large management company, we can send them a verification of rent form.
If you rent from a private landlord, you must produce canceled checks showing a timeline of on-time payments. Recently we had an underwriter give us a little trouble for a client living with a family member. The client had an unwritten agreement with her mother to pay $600 a month to live in her home. The issue came where she did not pay her mother with a check each month. Our client would pay the cable and electric bill and then give her mother the difference to total $600 a month. The difference was often paid in cash without a paper trail.
Since this client was in an active Chapter 13 Bankruptcy, this was a manually underwritten loan. The underwriters told us to get a rent-free letter detailing the verbal rental agreement AND show on-time payments to the cable and electric bill. The underwriter was able to justify their decision with on-time payment based on the payment history for the two bills and the letter of explanation from the mother. If you plan on purchasing a house in the near future, it is important to keep a paper trail for all rental payments. If you are currently paying your rent in cash, it would be a good idea to switch to paying with a check. Gustan Cho Associates will exempt rental verification for borrowers who are living rent-free with family members to save money for a down payment for their home purchase.
Click here for more details on VERIFICATION OF RENT.
Qualifying With A 5-Star National Direct Lender With No Overlays On Government And Conforming Loans
Periodically we like to share success stories of recently closed mortgages and Lender Overlays Scenarios. Many of our readers are facing similar situations and we want to show them there is light at the end of the tunnel.
Every mortgage borrower has different qualifications and no two mortgage loans are the same. Thousands of Americans get denied due to LENDER OVERLAYS and simply give up. We hope they find our website and reach out directly to Gustan Cho Associates. Our highly skilled mortgage team is here to assist seven days a week, mornings or evenings. Even if you do not qualify today, we will come up with a financial plan to qualify for your dream home as soon as possible.
We are constantly adding mortgage products such as down payment assistance and renovation mortgages to our lineup of mortgage products. We strive to do all we can to help as many clients as possible. We specialize in lower credit scores and higher debt-to-income ratio mortgages. Please reach out for a quote today. Contact Mike Gracz on 630-659-7644 or text us for a faster response. Or send an email to mgracz@gustancho.com! We look forward to helping you and your family.
This ARTICLE On Lender Overlays Scenarios Was PUBLISHED On August 12th, 2021
August 12, 2021 - 5 min read