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A VA loan isn't this much trouble is it?

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Was going through First Place Bank for a VA loan. Now my husband and I filed bankruptcy which has been discharged for two years, his credit score is 670 and he has no late payments or collection accounts. First the lender asked us for a barrage of paper work just to get a pre-approval, then he gave a checklist for pre-underwriting:The underwriter will require the following items for a complete approval. I don’t need them right now, but I need to know that you can fulfill the requests:

Most recent utility bills and letters from the utiities stating that you have paid on time for at least 18 months. I need 3 accounts. This can include, cable, gas, electric, cell phone, auto insurance, etc.

An explanation of the NSF error from Comerica and a reversal of fees

An explanation for the overdrawn account from Chase, #...55015 dated Nov 26. Opening balance was -$21.32.The VA will look at all NSFs as late pays, and because of the bankruptcy, deny the loan.

Copy of check deposited from the Apollo Group on 10/28 into the Chase account with a written explanation of what this was for/from.

Underwriting is nervous about this loan because of the lack of liquid assets, given that you do not currently have a house payment. I am assuming that you are not paying property taxes also? It would not hurt to write up a short explanation.

Now I thought this was a bit much being that we were never informed about this, all every lender that I ever spoke with (including this one) stated was keep his credit report clean.

Do you have to do that much work after a bankruptcy to obtain a VA loan or is this lender just a bit paranoid? And really how much does an underwriter expect you to save with one income and 3 kids? Just need some insight.

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bankruptcy which has been discharged for two years, his credit score is 670 and he has no late payments or collection accounts. .......error from Comerica and a reversal of fees

An explanation for the overdrawn account from Chase, #...55015 dated Nov 26. Opening balance was -$21.32.The VA will look at all NSFs as late pays, and because of the bankruptcy...... deny the loan.

Copy of check deposited from the Apollo Group on 10/28 into the Chase account with a written explanation of what this was for/from.

Underwriting is nervous about this loan because of the lack of liquid assets, given that you do not currently have a house payment. I am assuming that you are not paying property taxes also? It would not hurt to write up a short explanation.

Now I thought this was a bit much being that we were never informed about this, all every lender that I ever spoke with (including this one) stated was keep his credit report clean.

Do you have to do that much work after a bankruptcy to obtain a VA loan or is this lender just a bit paranoid? And really how much does an underwriter expect you to save with one income and 3 kids? Just need some insight.

My $00.02

I bet you found the house first - then asked thought about your credit.... if this is the case, 1st time buyers normally do it this way...:roll:

This way is being more conservative - getting copy's of your Trans-union, Experian, and Equifax credit reports, examining them for errors. It takes about 30 days for them to correct any derogatory information. Ending with your credit report being up dated and a higher credit score.

No longer a Loan Officer - my experience with credit reports, especially with a previous bankruptcy, they contain old information that "weighs down" new information being listed.

My suggestion - get a copy of your tri-merge from the broker, review it for old information. Then write the CB's to remove/update the information. This takes about a month.

Then next time you are going to applying for a loan, his score can be higher, resulting in less headaches and even a lower interest rate....:)

.

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1. No, did not look for a home first.

2. Asked about credit first been keeping an eye on it for over a year(getting monthly updates) so our scores were not a surprise and are high enough to obtain a VA mortgage.

3. Not a first time buyer.

4. Spoke with VA it appears that the bankruptcy is the issue only being 2 years since discharge, and the reason they needed the utility bills was because he hasn't re-established a lot of credit history since discharge so the utilities where just an extra piece.

Thanks anyway.

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No punn intended - understand you are in recovery mode. The is very good- this is the best website for free information, you can learn to repair your credit.

Note on VA loans - the actual score is not looked at when applying for a loan, but the payment history is.

From the VA website concerning Bankruptcy - http://www.benefits.va.gov/warms/pam26_7.asp

e. Bankruptcy The fact that a bankruptcy exists in an applicant’s (or spouse’s) credit history does not in itself disqualify the loan. Develop complete information on the facts and circumstances of the bankruptcy. Consider the reasons for the bankruptcy and the type of bankruptcy filing.

Bankruptcy Filed Under the Straight Liquidation and Discharge Provisions of the Bankruptcy Law

You may disregard a bankruptcy discharged more than 2 years ago.

If the bankruptcy was discharged within the last 1 to 2 years, it is probably not possible to determine that the applicant or spouse is a satisfactory credit risk unless both of the following requirements are met:

• the applicant or spouse has obtained consumer items on credit subsequent to the bankruptcy and has satisfactorily made the payments over a continued period, and

• the bankruptcy was caused by circumstances beyond the control of the applicant or spouse such as unemployment, prolonged strikes, medical bills not covered by insurance, and so on, and the circumstances are verified. Divorce is not generally viewed as beyond the control of the borrower and/or spouse. If the bankruptcy was caused by failure of the business of a self-employed applicant, it may be possible to determine that the applicant is a satisfactory credit risk if

- the applicant obtained a permanent position after the business failed,

- there is no derogatory credit information prior to self-employment,

- there is no derogatory credit information subsequent to the bankruptcy, and

- failure of the business was not due to the applicant’s misconduct.

If a borrower or spouse has been discharged in bankruptcy within the past 12 months, it will not generally be possible to determine that the borrower or spouse is a satisfactory credit risk.

Petition Under Chapter 13 of the Bankruptcy Code

This type of filing indicates an effort to pay creditors. Regular payments are made to a court-appointed trustee over a 2 to 3 year period or, in some cases, up to 5 years, to pay off scaled down or entire debts.

If the applicant has finished making all payments satisfactorily, the lender may conclude that the applicant has reestablished satisfactory credit.

If the applicant has satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.

Again - get a copy of your tri-merge from the broker, review it for old information. Anyone who runs your credit is required to furnish you with a copy. After cleaning up as mush as possible through dibuting old information off. If you are serious about repairing your credit - start small, getting a gas or Walmart credit card. Charge and pay off.

Next step is applying for small secured loans. Not paying everything off at one time, but sending more than the required payment. This method you will see the score dramatically rise of the course of several months.

Good Luck:)

.

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My guess is they don't want to fund this loan in the first place, and they're giving you the runaround. Our VA mortgage NEVER asked for these kinds of details and it was funded after a bankruptcy.

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News Alert:

In this economy, underwriters are asking for the proof of the last time you passed gas and where. The good old days are gone. Underwriters want proof in their files so that can substantiate their decision if they are ever called on the carpet. Don't take it personal.

I have had clients with great credit and no BK be asked to explain things on credit or on bank statements or paystubs. NSFs are a problem for any borrower. The underwriter always asks about this.

Some of the things youu are being asked are due to the BK. Reason being, just about every lender wants to see proof that the borrower has been paying their creditors on time since the BK discharge.

You had a poor loan officer. Because I warn EVERY borrower about what can happen in the underwriting process & what to expect, and I put it in writing. I don't want you to be surprised because if the loan does not close, I don't get paid.

The underwriter will want a GOOD explanation for the NSF. Hope you only had one NSF. They usually like to see that it was a bank error. By the way, this is nothing new. When I bought my 1st home in 1984, I had to provide an explanation for an NSF & there was no BK. Fortunately, it was a bank error which was obvious because the charge had been reversed - but they still wanted a letter of explanation. Their concern is that if you are having trouble paying the $100 cable bill, how will you pay the mortgage? Keep that in mind in writing your letter of explanation (LOE) and get help from your loan officer.

An excuse that works well IF there was a deposit made around the same time as the NSF is that you thought you had deposited the check or you thought your spouse had deposited the check, but it never was. As soon as you found out, you ran to the bank and made the deposit. This excuse works when there was one NSF or more than one on the same day. But you can't have but so many valid excuses for NSFs that occurred randomly.

By the way, all my VA lenders have minimum credit score requirements. Regardless what the VA says, the lender can have a minimum score requirement. Same with FHA. It's printed on all my rate sheets.

Good luck.

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I agree 100% with the above post.

Also, the underwriters have different criteria for different geographic areas (it appears).

Here in Fl where we are still a declining market, the underwriters will ask for more documentation. In an area that hasn't been hit hard by the economy or is not still declining, will have an easier time in underwriting.

Remember, although the VA and FHA have standards, each bank that offers the loan can tighten their loan critieria; and, they certainly do. If you had a prior BK and you surrendered a house in the BK, you will have to qualify not only for the post-BK criteria, but also the post-foreclosure or post-short sale criteria; depending upon how you transfered the property after/before the BK. There is a whole matrix the underwriter looks at to determine eligibility.

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