I submitted an a Fha loan to underwriting last week. The borrower and co-borrower had good credit, low debt to wage ratios, two years employment history, etc. The underwriter stylish the Fha loan with conditions. Most of the conditions were letters of explanation and title work, nothing out of the ordinary. I gathered the conditions and submitted them back to underwriting only to get the loan declined!
Here is what happened, while I'm gathering conditions the underwriter exercised the 4506T. The tax transcripts come back from the Irs and show that the co-borrower filed his taxes with 2 separate communal security numbers over the past two years.
Even though the co-borrower was a permanent resident alien with legal documentation he used two separate communal security numbers to file his taxes in former years. I never opinion to ask how he filed his taxes in former years and so was not aware that he used Itin numbers to file his taxes prior to be granted permanent resident status.
So here is what I learned from all this. Firstly, if one of your borrowers is a permanent resident alien with legal documentation it would be wise for you to verify that he filed his taxes, W2's, and pay stubs with the same communal security estimate for the last two years.
Good news is I was able to take this single borrower off the loan and resubmit the loan to underwriting for an approval. Oh yeah, the Dti was high but we submitted the co-borrowers pay stubs to underwriting along with a letter of explanation, explaining a lack of reputation and 2 year work history. We got the irregularity from underwriting on the Dti. Happy ending after all!
Fha Loan - Permanent Resident Alien