Recent Late Payment On Mortgage Lending Guidelines

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This BLOG On Qualifying For Home Loan With Recent Late Payment On Mortgage Was UPDATED And PUBLISHED On May 31st, 2020

What are the latest guidelines for late mortgage payments?

Homebuyers who are seeking a home purchase mortgage or are homeowners seeking to refinance their home, recent late payment on mortgage is looked at.

  • Borrowers can have prior bad credit due to extenuating circumstances
  • Borrowers can have prior bankruptcy, foreclosure, short sale, deed in lieu of foreclosure and qualify for a loan
  • Borrowers can have unpaid collection accounts, charge off accounts, and prior late payments on the credit report and qualify for home loans
  • However, recent late payment on mortgage in the past 12 months is really frowned upon by lenders
  • Multiple recent late payments may disqualify from qualifying for a mortgage loan until consumers have had a history of 12 months of timely payments on all of the debt obligations

In this article, we will discuss and cover the Recent Late Payment On Mortgage Lending Guidelines.

Verification Of Rent

If mortgage underwriter is requesting verification of rent as a condition to approving a mortgage loan, what they need for the verification of rent to be valid is 12 months of timely canceled checks paid to the landlord.

  • The mortgage underwriter will review the 12 months of canceled checks renters have provided
  • They will make sure rental payments have been paid on time
  • Mortgage underwriters take timely rent payments extremely seriously
  • This because it is an indicator of whether or not borrower have a history of paying housing payments on time
  • All lenders require 12 months timely rental payment history on manual underwriting
  • There are a few lenders that will allow a one time 30-day late payment in the past 12 months as long as the borrower gets an approve/eligible per Automated Underwriting System Approval
  • I do not know of any lenders who will qualify a renter who has more than a one time 30-day late payment
  • Multiple 30 days late payment on rental payments will be a problem in getting AUS Approval

May need to wait until re-established a 12-month on-time rental payment history and all other payments being on time in the past 12 months.

Verification Of Mortgage With Recent Late Payment

Which means mortgage verification with recent payment delays

Homeowners looking to refinance current home loan, all lenders will require verification of mortgage. Verification of Mortgage is when the new lender verifies the borrower’s mortgage payment history with their current mortgage lender. New lenders normally require borrowers have made timely mortgage payments in the past 12 months.

  • All lenders require borrowers show 12 months timely mortgage payments to current lender
  • However, there are a few select lenders that will allow a one-time late mortgage payment in the past 12 months
  • This is allowed as long as the late mortgage payment did not happen in the past 3 months
  • Homeowners could have been late multiple times on mortgage payment in the past
  • But not in the past 12 months

Verification of Mortgage is also known as VOM.

Qualifying For New Mortgage With Recent Late Payment On Prior Sold Home

Many homeowners who sold their homes have a hard time qualifying for a new home purchase loan because they did not have a timely mortgage payment history on the home that they sold.

  • Even though the home is sold and the mortgage balance is paid off, new mortgage lender will review the credit report
  • One of the most important factors they want to see if the homeowner has been timely with old mortgage payments in the past 12 months
  • Even though mortgage balance is paid off, borrowers can encounter problems in qualifying for a new home purchase mortgage loan

There is nothing they can do about this except to wait out the 12 months before they can qualify for a new home purchase mortgage loan.

Qualifying For Mortgage With Direct Lender With No Overlays

How to qualify for a mortgage with a direct lender without overlays

Gustan Cho Associates is a national mortgage company with no mortgage overlays on government and conventional loans. Home Buyers who recently sold their homes and need to qualify for a new mortgage can have Recent Late Payment On Mortgage and still qualify if they can get an approve/eligible per Automated Underwriting System. In the event they do not get an approve/eligible per AUS, it cannot be manually underwritten because all manual underwrites require 12 months timely payment history. However, homebuyers may qualify for non-QM loans where a few late payments in the past 12 months are allowed. Non-QM loans are alternative financing programs that if offered by Gustan Cho Associates Mortgage Group.

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