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Late Payments in The Past 12 Months
Lately, we have seen many late payments in the past 12 months from mortgage loan applicants. I just got news from Alex Carlucci that he got clear to close on a manual underwritten FHA loan for a borrower with many late payments due to extenuating circumstances. Due to extenuating circumstances, Alex Carlucci got approved with tons of late payments in the past 12 months via manual underwriting.
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9 Replies
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Alex, please share your story.
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@Alex Carlucci @gustan-cho Will you please share the specifics on this file? This would be great info to have for future BK clients.
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More and more mortgage loan applicants have late payments in the past 12 months than ever. I have never seen so many late payments in the past 12 months of borrowers in my entire mortgage career than now. Is it inflation? Is it high rates? Is it skyrocketing housing prices? Or is it that we are going to have another Great Reset like the Recession of 2008. It was more like the Great Depression of 2008 than the Great Recession of 2008. I can bet anything we are going to have a collapse of mortgage rates. Housing prices need to correct about 30%. Home prices are overly inflated.
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@gustan-cho I think you are on the right track with a housing price reset. With the FED increase of another 25 BPS yesterday to attempt to slow inflation it is more important than ever for borrowers to make sure they are doing everything they can to not get that 30-day late on their credit report. Especially with FHA. I just had to tell a borrower we could not move forward due to several late payments that were recently posted on their credit report. A manual underwrite may work in specific situations, but getting the word out to our borrowers to make sure they are not missing critical payments that report to the credit bureaus is crucial. This is a topic I will discuss in my blog post and FMM Friday Mortgage Minutes this Friday.
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Watch and see. Rates are going to tank and when they do, it’s gonna get slammed hard.
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Dustin, I can’t believe these rates. Might as well go non-QM loan.
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Sounds about right!
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Dustin, do you know of any wholesale lenders that will do 120 days of late payments in the past 12 months?
Full doc non-QM wholesale lender.
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It sounds like Alex Carlucci successfully navigated a challenging situation with a manual underwriting process for an FHA loan. Here are some key takeaways from this scenario:
Key Points:
Manual Underwriting:
Manual underwriting allows lenders to assess borrowers who may not meet standard automated criteria, which is especially useful for those with unique circumstances.
Extenuating Circumstances:
Extenuating circumstances can include job loss, medical emergencies, or other significant life events that impact the borrower’s ability to make timely payments. Lenders often consider these situations when determining eligibility.
Late Payments:
While late payments can typically hinder loan approval, manual underwriting provides flexibility. Lenders may look for patterns in the borrower’s payment history and overall financial stability.
Documentation:
Borrowers in similar situations must provide thorough documentation explaining late payments and demonstrating their current financial stability.
Importance of Communication:
Clear communication between the borrower and lender is crucial in these cases. Borrowers should be proactive in explaining their circumstances and providing any necessary documentation.
This case highlights the importance of manual underwriting in accommodating borrowers with unique challenges. It emphasizes the need for lenders to assess each application holistically, considering both the borrower’s current situation and past difficulties. If you’re experiencing similar cases, maintaining open lines of communication and thorough documentation will be key to navigating the underwriting process successfully.
If you have further questions or need more specific insights, please ask!