This guide covers VA late payment after bankruptcy mortgage guidelines on VA loans. VA loans were created and implemented to reward active-duty or retired members of the United States Armed Services for their service. Only eligible members with a 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 or conflict in the world. It may be more difficult for servicemen and women to pay their bills on time if they are deployed 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.
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 past 12 months.
The automated underwriting system will take the VA Late Payment After Bankruptcy 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 do 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 Overlays
There are two types of VA mortgage guidelines:The minimum Agency VA Mortgage Guidelines and the 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.
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 or a housing event. There are many cases where borrowers can get automated approval with late payments after bankruptcy 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 or foreclosure are 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. Over 80% of our borrowers at Gustan Cho Associates are folks who could not qualify at other lenders due to their lender overlays.
Gustan Cho Associates are correspondent lenders, and mortgage brokers. We originate and fund government (FHA, VA, USDA), and conventional loans but have the ability to broker non-QM and other non-bankable mortgage loans.
If you are looking to qualify for a mortgage with a mortgage company with a hybrid banking/broker business model with no lender overlays on government and/or conventional loans, please 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. Gustan Cho Associates is nationally known for its 90% LTV Jumbo Loans with up to 50% DTI and credit scores down to a 660 FICO.
