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I was supposed to close on a house this week. Only One week ago my loan officer informed me that my student loans, he knew were in forbearance until Feb 2011 were in issue. FHA rules they claim loans must be in forbearance one full year. So if I close in June then my loans must be in Forbearance to June 2011. Is there any policy exemption FHA could give me anyone knows of? I have already put a $ 1000 deposit, and paid $ 415 for an apprasial and $ 100 for a roof inspection. If I lose this house do I have any recourse against the bank as the loan officer has been negligent thoughout this whole process ignoring emails from my realtors and other agents. They dropped this bomb on me one week before closing.

  1. Reply
    May 4, 2011 at 12:13 am

    So, are you saying the lender is not going to fund the loan now? What did they say about the $ you have paid?

    The same government that insured your student loan insures FHA, Fannie Mae and Freddie Mac, and VA loans. If you defaulted on a student loan, you will not be able to qualify for traditional rates and lenders.

  2. Reply
    May 4, 2011 at 12:19 am

    This is why you MUST use an experienced FHA loan officer.

    This should only be an issue if you have debt to income ratio issues, so I am assuming you do. There are a myriad of ways to solve your problem, but knowing which one will work for you is impossible without seeing your file. Your loan officer was negligent or most likely incompetent to not know this from day one! As for recourse, you could lodge a complaint with their licensing agency; this assumes they are licensed. If they work at a banking institution they probably are not.

    First step is to have your agent get an extension on close of escrow. Next step if to see if your loan officer can get an exception with a letter of explanation. If that does not work, start shopping for a competent loan officer, FHA rates today are at 4.375% with no points so you probably locked higher than that anyway. FHA appraisals are transferable and are attached to the case number and property so you won’t have to pay for that again. Your biggest issue is to get an extension and competent representation.

    Ps, ignore any answer where it’s obvious the person answering does not know what the word “forbearance” means.

  3. Reply
    May 4, 2011 at 12:38 am

    The biggest problem is you are in default on a Government loan. That kills the deal. Any competent loan officer should have seen when looking at the credit file the balance was increasing. I would have questioned you hard on this. Now if you had been in repayment for 12 months then all that would have been needed is a payment history on the student loans and that would have been ok. You missed the point of what he was stating to you. Now if you are trying to get the loans caught up with the 1 year forbearance that is another matter and yes that does require 12 months to get current. These were listed in the derogatory section of the credit and should have stuck out like a sore thumb. How did you answer the federal declarations on the application when it ask you are you or have you ever been delinquent in in federal debt etc etc?
    I am a mortgage banker in TN

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