Getting Back Mortgage Loan Approval

by Gennifer in Paris, AR and by Sylvia in Riverdale, Ga

Ask Kate about getting back your mortgage approval: So you got a trusted referral before choosing your mortgage originator, asked qualifying questions, and were pleased with the written Good Faith Estimate. But suddenly your mortgage process comes to a screeching halt. Meet borrowers who ask for help getting back their loan approval.


Underwriter rejected appraisal twice on a refinance. Now what?

By Gennifer in Paris, AR
Underwriter rejected appraisal twice on a refinance. Now what?

Hi Kate:

Last month my husband and I applied to refinance our home through a local bank where we have kept our checking and savings accounts for the past 10 years.

We hit a rough patch 5 years ago went through a foreclosure and filed bankruptcy. But we have since rebuilt our credit.

Our bank reviewed our application, pulled our credit and gave us a 3.75% rate lock on a 15 year fixed mortgage. We were thrilled as we are trying to get out from under a 30 year ARM with a high (currently about 8%) interest rate.

The bank sends an appraiser to evaluate our home...

The bank sends an appraiser to evaluate our home. Again we were pleased when the appraisal came back showing sufficient equity so that we could avoid PMI. And then we hit a huge hiccup...

The underwriter said the comps the appraiser used were insufficient. Specifically, our home has a finished basement which is unusual in our area to begin with. We live in a sparsely populated rural area with very little buying/selling activity. Consequently, there were no recent sales of homes with basements to include in the appraisal.

The appraiser explained this in his report and also outlined the methodology he used to come up with the comps he selected for the report. Our loan officer encouraged us to ask the appraiser to amend his appraisal using better comps. The appraiser found one home sale with a basement that was a little over a year old. He added it to the appraisal and resubmitted it.

The underwriter rejected the appraisal again...

The underwriter rejected the appraisal again saying the comp with the basement that the appraiser added was not recent enough. Basically, the bank has now said 'We're sorry. But we just can't make this work. It's over.'

The appraiser suggested another bank and referred us to a loan officer/underwriter with whom he has a working relationship. He felt there was a good possibility that we wouldn't need to plunk down another $450 for a new appraisal.

But as fate would have it, this particular loan officer is on medical leave. And her assistant referred us to XYZ bank. As it turns out, I know some people at XYZ bank in connection with my work. I'm not comfortable having my personal financial information floating around there.

So now we are left wondering if any options are out there for us...

So now we are wondering what if any options are out there for us. We can't afford to keep shelling out $400 - $500 over and over only to be turned down. We're probably good for one more try at this. As we understand it, the loan we applied for was backed by Fannie Mae. I don't know if that has anything to do with the inflexibility we encountered with the underwriter or not.

Kate, what's your opinion of our situation? Do we have a snowball's chance of getting out from under this ARM and in to a fixed rate mortgage? Or do we just need to content ourselves with paying down the mortgage we have as fast as we can? Any advice or help would be much appreciated.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Underwriter rejected appraisal twice on a refinance. Now what?

Hi Gennifer,

Appraisals can be a real make-it-or-break-it in the loan approval process as you are finding out.

Additionally, regardless of an appraiser's report, the underwriter can override the value.

Furthermore, due to the mortgage debacle, discussions with appraisers are now regarded as an attempt to steer the value. So truly, I am not sure how much benefit you will get from switching lenders. It's a toss up.

If you decide to risk another appraisal fee, get referrals from friends because the knowledge and experience level of the mortgage originator is crucial to your success.

Should you know any active real estate agents, ask if they are aware of any comparable sales that may be pending, not yet closed. Possibly an underwriter would factor in the pending sale.

By the way, I know how frustrating appraisal issues can be. I tell a little of my personal story at Disputing Low House Appraisals.

Best wishes,

Ask Kate
P.S. Should you make the decision to stick with your 8% mortgage rate, I can show you how to effectively lower the interest rate using an accelerated payoff with no additional money out of pocket versus an expensive refinance. Read more about The Mortgage Freedom Project here and learn how to free yourself from the bank, once and for all!

Got foreclosure settlement. Waited 3 years as I was told. Presently under contract to buy a house but can't close.

By Sylvia C in Riverdale, Ga
Got foreclosure settlement. Waited 3 years as I was told. Presently under contract to buy a house but can't close.

Hi Kate:

After receiving settlement from Bank of America foreclosure suit, I have waited the 3 years I was told needed to pass before I could apply for a mortgage.

Recently while under contract for a house, I find out that although my foreclosure was approximately 2010, Bank of America didn't file claim until 2012.

This means I have to now wait until 2015 to buy a house. That is not my fault, They didn't file claim with HUD when it foreclosed.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: Got foreclosure settlement. Waited 3 years as I was told. Presently under contract to buy a house but can't close.

Hi Sylvia,

Well, this stinks. I am so sorry to hear of this. How disappointing for you!

It's a shame your lender didn't tell you that it's the date the re-conveyance of title is recorded (this document can vary according to the state) that marks the onset of the waiting period after foreclosure.

For the process to take a year is not unusual. However 3 years seems excessive. I suggest you call the title company yourself to verify when the deed of conveyance was recorded. If for no other reason, at least you will know first-hand how long you will need to wait and be able to plan accordingly.

If it turns out that you have an extended waiting period...

If it turns out that you have an extended waiting period before you can apply for a new mortgage, use the time to better your financial standing. Put yourself on a budget, save as much money as you can, spend the least amount possible, and pay all bills on time.

Create files for your paystubs, W2s, tax returns, and bank statements. I've made this task easier for you with Kate's Personal Mortgage Planner.

Qualifying for a Home Mortgage Without Losing Sleep...

Lastly, in the comment section of Qualifying for a Home Mortgage Without Losing Sleep, you will meet another borrower, Kathleen, with a similar question to yours.

Best wishes,

Ask Kate

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Assuming loan after husband's death
by: Roque M in Garden Grove, CA

Dear Kate,

A close friend who just lost her husband is in need of help with her mortgage situation. Here’s her scenario:

Husband passed in March of 2013. He had refinanced the loan a few years ago, but the wife (my friend) is not included on the loan. She is included on the TITLE only.

She continues to run the family business and she has tax documentation to prove income. In addition, there’s plenty of equity on the house.

Up until now, she continues to make the monthly payments but as you can understand, she would like to assume the loan in order to be on both Title and Mortgage Loan on her name.

Please provide whatever assistance you can.
RM (Orange County, CA)

Hi Roque, Kate here...

I agree that she needs to be on the mortgage. Otherwise, should she have future affordability issues, how could she negotiate with the lender?

Understanding the difference between being named on title (owning) vs obligated on the mortgage (owing) is important. I'm glad to see you do.

Depending on the lender and the current loan program, it may be as easy as calling loan servicing for an assumption application.

But not all lenders are going to be in step with an assumption and perhaps you have already run into this.

So before she calls (or if you are the caller, she should be present to authorize the conversation), collect all of the documentation possible to discuss value and income as this will most likely be the lender's sticking point. Hopefully so since this is the homeowner's strong suit.

But should the lender not allow an assumption, I would ask them for an alternative. Put it like this, 'She owns the house. The original borrower is deceased. How would you suggest aligning the current owner with the mortgage?'

Assuming (that's a pun, isn't it?) they are not helpful, I suggest consulting an attorney to explore her legal rights.

But I am hoping you can pursue a more affordable solution before it comes to this. Read more about starting the mortgage assumption process.

Best wishes, Kate

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