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Loan officer says we were eligible underwriter says no. How is that possible?

We were promised by the loan officer that our loan will go through. Now he is saying underwriter is not cooperating because of too much debt. Is that possible? Can a mortgage company back out of a sales contract? by tonyphaff349 from Lenoir, North Carolina. May 1st 2014 Reply


Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,242 contributions

The short answer is yes. You debt to income should have been calculated by the loan officer prior to getting a pre approval to avoid any issues. Was there a change in income? What is your debt ratio?

May 1st 2014
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John Moran (TheHomeMortgagePro)
#8 ranked lender in Arizona - 663 contributions

Yes, this happens and I'm sorry to hear that it happened to you. A loan officer reviews and submits your information, but the underwriter makes the official approve or deny loan decision. A loan officer should never promise that a loan will go through until the underwriter has approved the loan. The mortgage company is not backing out of a sales contract, they never signed anything stating they would lend you money, regardless of what the loan officer tells you.

May 2nd 2014
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Jericho Cherry (Jerichocherry)
#56 ranked lender in Virginia - 1,107 contributions

Yes, unfortunately that can happen. The underwriter makes the final decision.

May 2nd 2014
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Eric Vander Werff (Evanderwerff)
#24 ranked lender in Idaho - 5 contributions

Tough situation - what is the debt issue? Some underwriters are adding a payment to collections and chargeoffs as a result of the Ability To Repay laws. Some lenders have changed their guidelines to a blanket maximum of 41 or 43% back end Debt Ratio. I have 9 years experience, lend in all 50 states and I would be happy to review your situation if you would like a 2nd opinion. Eric Vander WerffNMLS 107939Goldwater Bank206-794-6388

May 2nd 2014
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Mike Silkworth (msilkw_195_870)
#31 ranked lender in Michigan - 527 contributions

The underwriter is the person that has the ability to make a loan commitment, not the Loan officer. This should only happen if in the processing of the loan, there was NEW information discovered that took you out of qualification. If this is not what happened, then your Loan Officer let you down. Since you are this far in the process already, it would be worth talking to your Realtor about having another lender look at your deal. It's possible your loan officer put a poor loan package together for the underwriter to consider.

May 4th 2014
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