Understanding Lender Overlays Versus Agency Mortgage Guidelines

This article covers Understanding Lender Overlays Versus Agency Mortgage Guidelines

Not all lenders have the same lending requirements on government and conventional loans. Gustan Cho Associates has no lender overlays on government and conventional loans. Over 75% of our borrowers could not qualify at other lenders due to lender overlays. APPLY NOW with Gustan Cho Associates if you need a lender with no lender overlays or need to qualify for non-QM loans.

Gustan Cho Associates is lucky to be funding mortgage loans without LENDER OVERLAYS during the COVID-19 coronavirus outbreak. Most of our colleagues in the industry have added credit score overlays to their current mortgage products. Most investors are leery during these uncertain times. Causing them to add additional qualifying requirements to obtain a mortgage. Luckily, we are not facing that issue as of today. In this blog, we will detail a few loan scenarios we have funded during the pandemic and how to apply for a mortgage at Gustan Cho Associates.

Understanding Lender Overlays Versus Agency Mortgage Guidelines Case Scenarios

CASE SCENARIOS:

Two-year work history in the United States.

  • Recently we had a client who immigrated to the United States from Hong Kong who has not been in the United States for two full years
  • He was turned down by his lender because they required a two-year working history in the United States
  • However, that is not a Fannie Mae guideline
  • We were able to close a conventional mortgage loan while providing a two-year work history between the United States and Hong Kong
  • It is underwriter discretion to use work history based out of the country
  • This particular borrower had extensive and detailed work history from Hong Kong
  • We were able to close this transaction no problem

Of course, they would only count his qualifying income from the United States.

Understanding Lender Overlays Versus Agency Mortgage Guidelines On Outstanding Collections

VA mortgage with collection accounts in the past 12 months.

  • We recently closed a VA loan even though there were collection accounts in the past 12 months
  • The collection accounts were on private student loans from a small university located in Virginia
  • Our processing staff completed a credit supplement to show that the last payment made to the small university was in 2017
  • Well over 12 months ago
  • Between the credit supplement and the information provided by the borrower, the underwriter was able to use this documentation and close the transaction
  • In this example, the credit score was 595
  • A quick note that most lenders are currently requiring at least a 620 to close a VA mortgage

However, there is not a true credit score requirement for VA mortgages.

Bank Statement Mortgage Loans For Self-Employed Borrowers

What are bank statement mortgage loans for self-employed borrowers

Bank statement mortgages.

  • NON-QM mortgage loans are starting to make a comeback
  • Our team has recently closed a bank statement mortgage, for the first time in months
  • This is exciting news for self-employed borrowers
  • Most self-employed barbers take advantage of tax to ductions to minimize their tax responsibility to the IRS
  • Bank Statement mortgage products disappeared overnight at the beginning of the pandemic
  • The good news is bank statement loans are slowly coming back
  • This particular bank statement transaction the borrower had a 780-credit score and a 20% down payment
  • RESERVES are also required
  • This particular bank statement program required three months of reserves
  • In the past, we were able to get the reserve requirement waived through underwriting
  • But due to the COVID-19 coronavirus outbreak, they are not currently allowing exceptions

For more details on these programs, please see our article on BANK STATEMENT LOANS.

Understanding Lender Overlays Versus Agency Mortgage Guidelines On Under 580 Credit Score Borrowers

FHA loan with a credit score below 580.

  • Last month we closed an FHA mortgage with a credit score of 525
  • The borrower had numerous recent medical collections that tanked their credit score
  • However, they had a 10% down payment and one month of reserves after down payment and closing costs
  • This loan required a manual underwrite but we were still able to get the transaction closed
  • Most lenders currently require a 620 or higher for FHA mortgage financing
  • Keep in mind, that is once again an overlay
  • Per HUD guidelines, the minimum credit score requirement for an FHA mortgage is 500

Please see our blog on MANUAL UNDERWRITING for more information.

Qualifying For A Mortgage With A Lender With No Overlays

How to qualify for a mortgage with a lender without overlays

Applying for a mortgage with Gustan Cho Associates is easier than ever.

  • The first step is to call Mike Gracz on 630-659-7644
  • You and Mike will have a one on one personal mortgage consultation to discuss any issues you may have
  • From there Mike will link you with a licensed loan officer in your state
  • You will then fill out an online application link which will allow us to verify your credit report
  • You will send in some basic income and asset documentation to complete the preapproval process
  • Those documents are listed below
  • Depending on the severity of your file, your loan officer will either issue a preapproval letter or a personalized plan to qualify as soon as possible

Remember, 75% of our clients have been turned down for a mortgage by their current lender or are not getting the customer service that you need to feel comfortable buying a home.

Documents Required To Start Mortgage And Underwriting Process

Documents to gather:

  • Last 60 Days Bank Statements – to source money for the down payment
  • Last 30 Days Pay Stubs
  • Last Two Years W2’S
  • Last Two Years Tax Returns (not always required)
  • Driver’s License or State ID

Mortgage companies are busier than ever. We recently had a client who has been trying to refinance their house since April. A mortgage transaction should not take anywhere near four months to close. The reason for the delay is simply the increase in mortgage applications. Mortgage companies are working as fast as possible. We are still able to close and fund refinance transactions in a timely manner. If you’re not getting the customer service you deserve or feel you are running into a lender overlay, please give us a call today. The team at GCA Mortgage Group are working seven days a week to meet your mortgage needs. Call or text Mike Gracz on 630-659-7644, or email [email protected].

Leave a comment