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VA LOANS WITH RECENT LATE PAYMENTS
To clarify our previous discussion. Late PAYMENTS within the last 6 or 12 months isn’t a blanket guide in which we grant without valid reasoning behind the lates. In addition to other things that may paint a proper picture away from financial management, usually via the credit report.
example.
If the applicant clearly has been making effort to keep a clean nose for the prior year(s) leading up to the lates. But fell off the wagon in recent times with one or two lates (simultaneous or sequential). A proper LOX or even owning the mistake as they do happen, has a good chance of being sympathetic to this situation due to historical evidence that’s contrary to financial mismanagement.
If said applicant has a history of multiple lates leading up to recent lates that just so happen to lapse into 12-month guidelines. Highly likely, 12 months of clean credit history is going to be required. Financial mismanagement is established with past history which connects dots far too easily.
At any rate, we will certainly do all that’s possible and within reason to have a deal succeed. Otherwise, we have no business doing 500 fico manuals
@Gustan
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2 Replies
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When we spoke a while back you said you can do a VA manual underwrite with as little as 6 months free of derogatory credit. Is that still the case? If so, Gus has a few files that may be a good fit. Can you two please connect?
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The above pattern is a disciplined approach when evaluating VA loan applications from borrowers displaying a recent default history. Here are some of the conclusions made from the said approach:
Critical Issues When Dealing With VA Loans with Late Payments Recently
Credit Maintenance: If the borrower’s credit history has been reasonable before the applicant’s recent postings of late payments, it indicates the borrower’s ability to manage his finances responsibly.
Simple Explanation: Using a Letter of Explanation (LOX) can help with recent bail-out late postings. Admitting the error and explaining its circumstances can reflect a gesture of responsibility and elicit some compassion.
Past Credit Activities: An applicant with a history or pattern of late payments will, in most cases, have to wait longer than normal to be considered for the loan. Twelve months of normal payments normally allow applicants to normalize their payment pattern.
Use Of Guidelines On A Case Case Basis: Each application should be looked at from the perspective of the complete past rather than only focusing on the number of late payments.
Implementation of the above Guidelines
All Procedures: Conduct a detailed assessment of the applicant’s credit report history, identifying all measures demonstrating laudable credit behavior.
All Supporting Documents: The application should be granted if it includes explanations and all relevant documents.
Watch Addendum: Communicate openly with the parties to the loan application so that the applicant’s situation is understood and the right advice is provided.
The attention given to assisting applicants in succeeding within certain limits is admirable. In doing so, you can assess the applicant’s circumstances and risks on a case-by-case basis and come to a well-balanced decision that meets the needs of the borrowers as well as the risk management needs.
If you would like more targeted help or guidance on any aspect of VA loans, do not hesitate to contact us!