If you’re applying for a residential mortgage loan and you’re looking at an FHA loan to purchase or refinance a home this lender requirement could be problematic for you as it relates to qualifying…
All FHA Mortgage Lenders in the United States use a system by Hud called FHA Connection. Its database is used to insure and generate FHA case numbers in association with your home loan application. When you’re applying for a mortgage loan and you’re denied for an FHA mortgage loan an MCR report has to be logged on that denial. It’s called a Mortgage Credit Reject. A mortgage credit rejection requires the lender specifically state within the FHA connection why they could not close that loan. Another lender cannot issue an approval for the same borrower. but the information needs to be in the system.
Here is where this could become problematic. Not all lenders look at things the same. So for example let’s say you apply for an FHA loan to buy a home with lender A. Based on their interpretation of your income and credit they deny your application and subsequently input this into FHA Connection. So you pull the plug with them and you move on to lender B then are gonna go to the same FHA connection and pull all of the information that was Put in there about why they rejected your loan previously. That doesn’t mean that lender B cannot close your loan it just means that your loan is going to be Tainted so to speak with lender B or any other lender that takes a stab at your mortgage loan application because it’s under the same FHA case number in the FHA connection.
Here is also something you need to be aware of any lender that concludes your loan most likely is going to have to get By a credit policy manager or a senior underwriter to get a second set of eyes on the loan to make sure the lone indeed meat Meets FHA standards. Maybe the property needed some work that couldn’t get done, maybe the credit score Maybe the debt-income ratio was too high whatever the case is it just means that you’re long with whoever you’re going to apply with Is going to get more scrutiny and more potential what is called underwriting conditions are otherwise known as Asks for more paperwork in the process. Be prepared for it knows it and understand it if you’re going to be looking at an FHA Bj residential mortgage loan to buy a home.
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