Manual Underwriting Mortgage Approvals!
While manual underwriting the underwriter analyzes your finances and decides whether you qualify for a mortgage. Manual underwriting can requires more paperwork than automated underwriting. Manual underwriting requires more paperwork and deep review of credit income, assets, debt, liability before approving your loan request. Private Manual Underwriting Mortgage Lenders Mortgage Lenders
VA Manual Underwrite Manual Underwriting Guidelines
- Maximum DTI is 45%
- Residual of 120% is required
- Maximum housing shock of 25%
- 2 Months reserves
- Minimum FICO is 580
FHA Manual Underwrite Lenders Guidelines
CREDIT SCORE RANGE
MAXIMUM QUALIFYING RATIOS
500 – 579
·Energy Efficient Homes may stretch ratios to 33/45
·Max LTV 90% unless cash out (80%)
·No down payment assistance
·One month in reserves for 1-2-unit Properties, three months in reserves for 3-4-unit properties (cannot be a gift)
580 and above
·Energy Efficient Homes may stretch ratios to 33/45
· One month in reserves for 1-2-unit properties and three months in reserves for 3-4-unit properties (cannot be a gift)
580 and above
Must have one of the following:
· months reserves for 1-2 units and 6 months in reserves for 3-4 units (cannot be a gift)
·Housing shock the lesser of $100 or 5%
580 and above
Must have two of the following:
·3 months reserves for 1-2 units and 6 months in reserves for 3-4 units (cannot be a gift)
·Housing shock the lesser of $100 or 5%
·Verified and documented significant additional income that is not considered effective
When the Manual Underwriting Mortgage Lenders mortgage applicants information is entered into what’s called an Automated Underwriting System, or AUS. This is basically a computer program that helps streamline the Manual Underwriting Mortgage Lenders mortgage application process and let lenders know at the outset whether a borrower will meet credit and income requirements. Manual Underwriting Mortgage Lenders mortgage loan applications that receive an Automated Underwriting System approval can allow lenders to proceed with fewer paperwork and documentation needs.
But there are certain circumstances that can shock an application to a Refer/Eligible that requires manual underwriting. Examples include:
- Foreclosure, short sale or deed-in-lieu of foreclosure
- A lack of credit depth or history
- A bankruptcy in the last 24 months
- Default or delinquency on federal debt
- Late mortgage payments
A Manual Underwriting Mortgage Lenders mortgage application that gets bounced from the automated system may be eligible for a manual underwrite. All this basically means is that a human will have to review the file and crunch the numbers and evaluate the risk. In addition, when facing a manual underwrite you will likely need to meet tighter Manual Underwriting Mortgage Lenders mortgage requirements when it comes to things like debt-to-income (DTI) ratio, residual income, derogatory credit, financial documentation and more.
We Provide Manual Underwriting Mortgage Lenders mortgage manual underwrite approvals!
Manual Underwriting Mortgage Lenders Manual Underwriting Mortgage Lenders (Please note that at least one “Yes” box must be checked to indicate the reason for the manual underwrite.)
Manual UW Was the loan referred by an Automatic Underwriting System (AUS)? o Yes Automatic Downgrades to Manual UW Mortgage file contains information or documentation that cannot be entered into or evaluated by TOTAL Mortgage Scorecard? o Yes
Additional information, not considered in the AUS recommendation affects the overall insurability of the Mortgage? o Yes
Any late mortgage payments on a cash-out refinance within 12 months of the case assignment? o Yes
Mortgages reported on the credit report with more than 2×30 late pays within 12 months of the case assignment? o Yes
Mortgages not reported on the credit report with any delinquency within 12 months of the case assignment, or more than 2×30 late pays within 24 months of the case assignment? o Yes
Previous Mortgage Foreclosure, Short Sale, or Deed-in-Lieu (DIL) of Foreclosure within last 3 years from Case Assignment? o Yes
Chapter 7 or 13 Bankruptcy discharged less than 2 years from date of loan application from Case Assignment? o Yes
Existing Disputed Accounts/Collections/Public Records (Excludes medical; includes chargeoffs, collections, late payments in last 24 months; aggregate balance >=$1000) o Yes
Business income shows a greater than 20% decline over the analysis period? o Yes
Potential Downgrades to Manual UW Authorized user account is only current tradeline o Yes
Multiple NSF’s on bank statements o Yes Mortgage lates not reporting (includes private notes) o Yes
Judgments appearing on prelim/title commitment/ judgment search but not on credit report o Yes
Mortgages extinguished through foreclosure that have fallen off credit report or showing “unrated” instead of 8 or 9. o Yes
Tax liens not showing on credit report o Yes
Manually Underwritten loans require compensating factors to improve probability for loan approval. Conditions will apply to substantiate the factors below.
FICO >= 580 FICO < 580 (and Non-Traditional/Insufficient) Housing/Total Debt Ratios 31/43 or 37/47 or 40/40 or 40/50
31/43 Max Debt Ratio # Comp Factors None 1 No Discretionary Debt 2 None
Many Manual Underwriting Mortgage Lenders mortgage applicants ask u what is a “manual underwrite” mortgage loan and what is needed to get a manual underwrite Manual Underwriting Mortgage Lenders mortgage approved?
It’s important for both manual mortgage applicants and Manual Underwriting Mortgage Lenders private mortgage lenders to realize what it means when a mortgage loan officer states that a loan requires a “manual underwrite”. Some FHA mortgage lenders don’t completely understand what it means in depth, so let’s start off with the basic definition of what a manual underwrite actually means when it’s applied for FHA or VA mortgage underwriting.
Almost all FHA and VA mortgage lenders including the large banks you walk use “automated underwriting systems” (AUS) to help them correctly underwrite or approve mortgage loans. These complex software systems were developed by Fannie Mae, Freddie Mac, and USDA. The software systems developed by Fannie and Freddie are used for conventional conforming loan approvals including approvals for FHA, VA, USDA loans. So here is the process:
An FHA or VA Manual Underwriting Mortgage Lenders private mortgage lenders will upload (or manually enter) all loan application data and and reissue your current credit report into into the appropriate software system and then “submit” the loan to the automated underwriting systems” (AUS). Within or about less than 1 minute if your Manual Underwriting Mortgage Lenders mortgage loan is “ELIDGIBLE” the computer system will provide 1 of 3 answers If the loan is “INELIGIBLE” then it can’t be done and the buyer / borrower will probably need to find some type of non-conforming (portfolio or hard money) type of loan.to your loan request. The result will either state “Approve”, “Accept”, or “Refer”.
Here are some examples of the most common three possible responses for an ELIGIBLE loan:
Assuming the loan is “Eligible”, then there is a second response that indicates the level of underwriting “scrutiny” required.
- “Refer/Eligible” is what will spark the lender to need to perform a manual underwrite. Many Manual Underwriting Mortgage Lenders private mortgage lenders DO NOT even offer the service of performing manual underwrites because they require additional work and are more prone to audits by Fannie Mae, Freddie Mac, or Ginnie Mae. Many manual underwrite lenders offer manual underwrites, but most of them prefer to only offer this service on government loans (FHA, VA, or USDA). Very few lenders will offer a manual underwrite on a conforming conventional loan. We offer manual under wring approvals.
Now we will go over what is most likely going to be required if your loan is going to be manually underwritten. The “Refer” part of the computer response simply means that a human being must manually “refer” to the entire guideline handbook (depending on the type of loan) to “manually” make sure it meets all guidelines, which obviously requires more time and analysis.
MANUAL APPROVAL WITH COMPENSATING FACTORS
Compensating factors. These are simply “good parts that offset the bad parts” in your loan request. Some compensating factors include:
Manual Underwriting Mortgage Lenders Manual UNDERWRITE WITH AND RENTAL HISTORY- For Manual Underwriting Mortgage Lenders mortgage underwrite approval Manual Underwriting Mortgage Lenders private mortgage lenders prefer to see proof of timely rent payments for the past 12 consecutive months. If you pay by check, then the loan officer will ask for 12 months cancelled rent checks (front and back) If you pay by automatic withdrawal then the loan officer will ask for the past 12 monthly bank statements that show the dates of each rent withdrawal. In addition, lenders may even have a 3rd party call the landlord or property management company to verbally verify timely payment history as an extra layer of proof (especially in cases where people pay by check but there are significant lags between the check date and the deposit post date).
Manual Underwriting Mortgage Lenders Manual UNDERWRITE WITH RESERVES- For manual underwrite approval Manual Underwriting Mortgage Lenders private mortgage lenders love to see reserves. Reserves is defined as future monthly mortgage payments in your account after closing. money that you’ll have left over after buying or refinancing a home. The best types of reserves are the most liquid (checking, savings, money market accounts). Reserves can also be retirement accounts, stocks, bonds, etc. but you’ll need to prove that you can actually access the money in such accounts (often a 401(k) will have a handbook that stipulates when and how much money any employee can actually withdrawal or borrow from the account– the loan officer will need this handbook if you want to be able to “count” a 401(k) account).
Manual Underwriting Mortgage Lenders Manual UNDERWRITE DOWN PAYMENT- For manual underwrite approval Manual Underwriting Mortgage Lenders mortgage lenders love to see that you have skin on the game. For FHA loans, the minimum down payment is typically 3.5%. If you can put down 10% then not only would this be considered a HUGE “compensating factor”, but also there are multiple benefits regarding when you can cancel FHA mortgage insurance if you put down 10%.
Manual Underwriting Mortgage Lenders Manual UNDERWRITE WITH PAYMENT SHOCK- For manual underwrite approval Manual Underwriting Mortgage Lenders mortgage lenders love to see your new payment inline with your current rental history. Whether you rent or own right now, if you can prove that you’ve been capable of making such a payment on time for the past 12 months AND the new proposed payment is not much larger than your current monthly housing payment, then this is a HUGE compensating factor because it proves that you’ve been capable of handling this payment range over the past 12 months without being late. Here is a trick to “count” this as a compensating factor EVEN IF your new proposed monthly payment will be significantly higher: Take a look installment loans such as auto loans. If, perhaps, your new housing payment was going to increase from $700 in rent to $1,100 per month for the mortgage and you have a $400 monthly car payment that is almost paid off, then point that out! Essentially, you have proven that between the rent and the vehicle loan, you’ve been paying $1,100 on time each month, and if that vehicle payment only has a few months left then there is no reason that the (now paid off) vehicle shouldn’t allow you to now handle the $400 increase in your housing payment. This is something that often loan officers even forget to analyze and point out.
Manual Underwriting Mortgage Lenders Manual UNDERWRITE WITH INCOME – For manual underwrite approval Manual Underwriting Mortgage Lenders mortgage lenders love to see Income that can not be “counted” for underwriting purposes.There is typically income that can’t be “counted” for underwriting purposes, but may be considered a “compensating factor”. Examples of such income can include child support or alimony that is received, but not always on time or for the full amount ordered by the judge, non-borrowing spouse income (a spouse that is not on the loan, but has a job), income from a second job (typically you can’t “count” income from a second job unless you’ve had it for at least two years), or self-employed income that has not been received for two years. Use your imagination to come up with additional compensating factors after reading these examples.
Job stability and /or likelihood for future wage increases.Mortgage lenders love it when employees have worked for the same employer for a long time, as they generally much less likely to be fired or laid off and more likely to receive raises. Additionally, mortgage underwriters actually consider the company and industry that your employer is in. A small independent medical insurance brokerage is less likely to be in business and retaining their employees than a company that’s made the Dow 30 index (such as Boing, General Electric, AT&T, etc.).
Manual Underwriting Mortgage Lenders Manual UNDERWRITE WITH WITH NON TRADITIONAL CREDIT HISTORY- For manual underwrite approval Manual Underwriting Mortgage Lenders mortgage lenders love to see “non-traditional” credit accounts to be added to the credit report to show timely payment history for at least 12 months. For no credit score home loan approvals these non traditional credit history are r required. If the borrower has less than three accounts with a 12 month history of timely payments, then many underwriters will require that the borrower document timely payments on other bills. The best types of accounts are “housing-related accounts”, such as utilities, renters insurance, cable TV, internet, etc. Other acceptable accounts can include auto or home insurance payments, mobile phone, storage unit, etc.The idea is to gather more data to determine a given borrower’s willingness / ability to make timely payments. Again, this only applies to manual mortgage applicants that have very few accounts that show up on their credit reports.
Keep in mind that if you are facing a manual underwrite, it’s usually due to poor credit or a high debt-to-income ratio. Most lenders will want to see a housing ratio (mortgage payment + mortgage insurance + home insurance + property taxes + homeowners association dues on a monthly basis) / (gross monthly income) around 31% and your debt-to-income ratio (“DTI”) at 43% or less (this is the same calculation except your “debt” includes all other payments such as minimum credit card payments, auto loans, personal loans, child support due, etc.). Many lenders that offer manual underwrite loans will not budge on these ratios, but some will. Generally, with compensating factors, you can get a manual underwrite loan approved with a housing ratio of up to 35% and a DTI ratio of up to 48% at the most, and these lenders are tough to find.
Elaborate explanations regarding any and all derogatory credit accounts, bankruptcies, or foreclosures. Effort COUNTS on such letters, so don’t try to cut any corners. Put some time into these letters, proofread them, and the “effort factor” WILL count for something. Typically a manual underwrite is a result of a poor credit history, so this will most likely apply to you if you are facing a manual underwrite.