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What are some of the reasons for loan to be cancelled after underwriting?

by maxghezer426 from Phoenix, Arizona. Jul 23rd 2015 Reply


Mark Hemingway (SFSLend)
#1 ranked lender in Colorado - 595 contributions

There are many different reasons for a loan to be cancelled after underwriting. Once an underwriter reviews the income and assets, there are certain ratio of debt to income that you must have. FHA has higher ratio limits of debt to income versus a conventional Fannie Mae or Freddie Mac loan. However, usually the underwriter will suspend the loan first and give the loan officer a chance to re-work the file and see if they can overcome any of the reasons for a suspense. But typically lenders will put the "ball back in your court" or with the loan officer to re-work the loan. Also if underwriter updates the loan application to put in the assets or income that are verified with supporting documents you provide, you would still need to get an automated approval. That could also suspend the loan and possibly get cancelled as well.

Jul 23rd 2015
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#135 ranked lender in Florida - 644 contributions

Could be a number of things or multiple items adding up. But recent short sale or foreclosure, debt to income ratio, credit history are the bigger ones...not really sure just speculation at this point...

Jul 24th 2015
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,109 contributions

Usually something came up that was missed for some reason. Not knowing the full situation it's really hard to speculate, but it could be something they found after. It also depends on what stage of underwriting your talking about. For instance, when your file first goes to underwriting it will usually come back out Approved with conditions. Then once all of those conditions have been put together, processing resubmits the file into underwriting. If something came up at that time that they did not see before, that could suspend or deny your loan depending on what it was. Also, most lenders pull a soft credit report right before closing to see if you have taken on any new debts, if you have this could raise your debt to income ratio and you may not qualify now. Also, they will re-verify your employment right before closing. If something changes with your job that could put a hold on your closing too. Best wishes, Sean

Jul 24th 2015
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