This ARTICLE On VA Late Payment After Bankruptcy Mortgage Guidelines On VA Loans Was PUBLISHED On November 22nd, 2019
VA loans were created and implemented to reward active-duty and/or retired members of the United States Armed Services for their service.
- Only eligible members with valid Certificate of Eligibility (COE) can qualify for VA loans
- VA loans are the best loan program in the country
- The VA administers the VA Home Loan Program to eligible veterans
- The VA does not originate, fund, or service VA mortgages
- Private lenders who are VA approved to originate, process, fund, and service VA loans
- Lenders need to abide by the minimum VA Agency Mortgage Guidelines if they want the VA loans they originate and fund to be insured
- In the event the borrower was to default on their VA loans, the VA will partially insure and guarantee the VA loan to the lender
In this article, we will cover and discuss VA Late Payment After Bankruptcy Mortgage Guidelines On VA Loans.
VA Agency Mortgage Guidelines By The Department Of Veterans Affairs
The Department of Veterans Affairs (The VA) has set lenient guidelines when it comes to VA loans.
- The VA realizes that data show veterans have lower credit profiles than their civilian counterparts
- This is due to soldiers being deployed during times of war and/or conflict in the world
- It may be more difficult for servicemen and women to pay their bills on time if they are deployed and/or are in the process of transferring
- Soldiers also get transferred from one base to another
This is the reason for the VA to have less strict agency mortgage guidelines. This holds true on VA Late Payment After Bankruptcy Mortgage Guidelines.
VA Late Payment After Bankruptcy And Foreclosure
There is no verbiage on VA Late Payment After Bankruptcy Mortgage Guidelines.
- However, all lenders normally will not approve any borrowers with late payments after bankruptcy, foreclosure, deed in lieu of foreclosure
- It is okay to have bad credit, prior bankruptcy, outstanding collections, charged-off, late payments, and other derogatory credit tradelines
- However, most lenders want to see timely payments in the past 12 months
- It also increases the chances of getting an approve/eligible per automated underwriting system with timely payments in the pas t12 months
- The automated underwriting system will take the VA Late Payment After Bankruptcy and/or a housing event when analyzing the borrower prior to rendering the automated findings
- VA and FHA loans are the only two loan programs that offer manual underwriting
- Timely payments in the past 24 months are generally required on manual underwrites
- One or two late payments in the past 12 to 24 months is not always a deal killer
VA Late Payment After Bankruptcy Mortgage Guidelines does not have any verbiage that late payments after bankruptcy are deal killers. However, the automated underwriting system will realize this. Borrowers qualifying with VA late payment after bankruptcy should have compensating factors.
VA Late Payment After Bankruptcy Mortgage Guidelines Versus Lender Overlays
There are two types of VA mortgage guidelines:
- The minimum Agency VA Mortgage Guidelines
- VA lender overlays imposed by individual lenders
All lenders need to meet the minimum VA Agency Mortgage Guidelines.
- However, lenders can have higher credit/income standards called lender overlays
- Lenders can impose overlays on just about anything
- Borrowers can qualify for VA loans with VA Late Payment After Bankruptcy
- However, many lenders may not accept borrowers with any late payments after bankruptcy, foreclosure, deed in lieu of foreclosure, or a short sale as part of their lender overlays
Gustan Cho Associates does not have any lender overlays on VA Loans. One or two late payments after bankruptcy and/or a housing event is not always a deal killer. However, it may become an issue when it comes to getting an approve/eligible per automated underwriting system.
Getting Approve/Eligible Per Automated Underwriting System
All loan officers will run the VA file to the automated underwriting system. The automated underwriting system will analyze the borrower’s credit profile which includes any late payments after bankruptcy and/or a housing event. There are many cases where borrowers can get automated approval with late payments after bankruptcy and/or foreclosure. However, there are instances where they cannot get an approve/eligible per AUS due to the late payment after an economic event. In cases where the AUS does not render an automated approval, the loan officer should try to get an AUS approval by doing the following things:
- Add down payment
- Add reserves
- Add other compensating factors
Late payments after bankruptcy and/or foreclosure is very bad. However, it is not a deal killer. There are many strategies the team at Gustan Cho Associates can implement in getting a VA loan approval with borrowers with derogatory credit tradelines.