Can You Get a Loan With Missed Payments and Get AUS Approved?

This ARTICLE Is About How To Get A Mortgage With Late Payments And Get AUS Approved.

The team at Capital Lending Network, Inc. often get asked daily by our viewers on How To Get A Mortgage With Late Payments And Get AUS Approved. Timely payments is one of the things mortgage underwriters scrutinize when underwriting borrowers. You can have prior bad credit, a prior bankruptcy, a prior foreclosure, outstanding collections and charged off accounts, repossessions, and other derogatory credit tradelines but you need timely payments to qualify for a home mortgage. Timely payments in the past 12 months is key to get an approve/eligible per automated underwriting system (AUS). FHA and VA loans are the two only home mortgage program that allow manual underwriting. To be eligible for an FHA and/or VA manual underwrite, you need timely payments for the past 24 months. It is better to have a lower credit score and timely payments in the past 12 to 24 months then a higher credit score and late payments in the past 12 to 24 months. Late payments after bankruptcy and/or a housing event is normally a deal killer.

Late Payments After Bankruptcy And Foreclosure

Most lenders will consider borrowers with late payments after bankruptcy and/or foreclosure as second offenders and will not want anything to do with them. However, Capital Lending Network, Inc. is a national mortgage brokerage company with no lender overlays on government and conventional loans. If borrowers can get an approve/eligible per automated underwriting system (AUS) with late payments after bankruptcy and/or a housing event, CLN Mortgage Group can do the loan. CLN only goes off the automated underwriting system findings and have zero lender overlays on FHA, VA, USDA, and Conventional loans. However, most lenders will not approve a borrower with late payments after bankruptcy and/or foreclosure even even though they get an approve/eligible per automated underwriting system. Capital Lending Network, Inc. will approve borrowers with late payment after bankruptcy and/or foreclosure as long as they can get an approve/eligible per automated underwriting system.

In this article, we will discuss and cover How To Get A Mortgage With Late Payments And Get AUS Approved.

Key On How To Get A Mortgage With Late Payments 

The key to get an automated approval per automated underwriting system is to have been timely in the past 12 months. One of two late payments in the past 12 months may not be a deal killer. You may get an AUS Approval with one or two late payments in the past 12 months if you are a strong borrower. By strong borrower, you will need a larger down payment, have reserves, have had great payment history, have strong aged credit tradelines, and have lower debt to income ratios. Lenders and the automated underwriting system frown upon the fact borrowers having late payments.

Manual Underwriting On FHA And VA Loans

FHA and VA Loans are the only two loan programs that allow manual underwriting. Manual underwriting is when a borrower cannot get an approve/eligible per automated underwriting system and needs to get downgraded for a human underwriter to carefully underwrite the file manually. There are times when an AUS approved file needs to be manually underwriting due to high layered risk factors such as multiple job changes in the past two years, high debt to income ratio, or other extenuating circumstances.

How Late Payments Impact Borrowers

Consistent late payments will be an issue for mortgage loan applicants in getting an approve/eligible per automated underwriting system. Capital Lending Network, Inc. are experts in helping borrowers on manual underwriting. However, to be eligible for manual underwriting you need timely payments for the past 24 months. Late payments on credit tradelines have different rating systems. Making late mortgage payments is one of the most serious derogatory credit penalties and consequences you can have You do not want to be late on your mortgage payment under any circumstances.

Housing Late Payments

Any mortgage payments that goes beyond 30 days late will be reported on your credit report as a mortgage late payment. Homeowners have a 15 day grace period every month to pay their mortgage payments. If the payment for the month is not received by the 15th of the month, the mortgage servicer will charge a late fee. However, the mortgage payment is not reported late as long as the borrower pays it by the end of the month. This holds true even though the mortgage servicer will charge a late fee for getting the mortgage payment on the 16th of the month and prior to the end of the month.

We will discuss on the next paragraph the consequences of late mortgage payments.

Consequences Of Paying Your Mortgage 30 Days Late

What could be the consequences of a 30-day late mortgage payment?

30 day late payments on a home mortgage is the worst late payment you can have if you are planning on applying for a new home mortgage. One late payment in the past 12 months is allowed to qualify for a home mortgage. However, multiple late late payments and/or rolling 30 day late payments on mortgage payments will be an issue if you are planning on qualifying for a mortgage. Let’s take a case scenario to better explain the seriousness of late payments on mortgage payments in the past 12 months. Let’s say you are a homeowner and have entered in sales contract to sell your current home and need to qualify for a new mortgage to purchase a new home. However, you had multiple late payments in the past 12 months on the home you just sold.

Bad Credit Versus Late Payments

Borrowers can get an approve/eligible per AUS with prior bad credit such as outstanding collections and charged off accounts. Late payments are alright if they are older than 12 months old. You will have a problem qualifying for a new mortgage for the new home purchase since you had multiple late payments on your mortgage in the past 12 months. This holds true even though your current mortgage will be paid off when you sell your home. Lenders want to see timely payments on your mortgage for the past 12 months for you to be able to qualify for a new mortgage loan. This holds true even though you have sold your home and paid off your previous mortgage.

Negative Impact Of Late Payments On Credit Report

Any 30 day late payments will report to all three credit bureaus and are considered really bad. Not only do creditors report all 30 day late payments to credit bureaus, but it will also drop your credit scores. A 30 day late payment can drop your credit scores 50 to 80 points. Other consequences of 30 day late payments is the late payment on your credit report will remain on your credit report for a period of seven years from the date of last activity (DLA). Any recent late payments on your credit report will have consequence in your ability in getting new credit. This holds especially true in getting a new home mortgage. Lenders will carefully review the overall payment history of the mortgage loan applicant. Any late payments reporting on the loan applicant’s credit report will be addressed and may be cause for a mortgage loan denial.

The Importance Of Timely Payments

To qualify for a mortgage, the key is to have timely payments in the past 12 months. This holds especially true if you need to get an approve/eligible per automated underwriting system (AUS). The best way to prepare for a mortgage with recent late payments is to make sure to timely pay all your monthly debt payments. Keep your credit card balances low. For maximum credit score optimization, keep your credit utilization ratio below 10%. As the late payment date of last activity seasons, your credit scores will increase. If you only have one or two credit tradelines, try to have a total of 3 to 5 credit cards. Do not apply for unsecured credit cards if your credit scores are under 680 FICO. Get secured credit cards. Secured credit cards are the easiest and fastest way of rebuilding and reestablishing your credit scores.


Gustan Cho is a senior mortgage expert and National Managing Director, providing direct-to-consumer advice at NEXA Mortgage LLC. We are a mortgage brokers licensed in multiple states. We are experts in FHA Loans, VA Loans, USDA Loans, Conventional Loans, FHA 203k Loans, Reverse Mortgages Jumbo Mortgages, Non-QM mortgages, Bank Statement Mortgage Loans for self employed borrowers, and alternative financing.

6 Comments

We have bankruptcy discharge in 2015 and late payments in 2017 for a closed account. Seeking to purchase a home and need help! Can anyone from Capital Lending Network help us? I also saw a lot of videos on YouTube from Alex Carlucci at Gustan Cho Associates.

Need to refinance. My current credit score is 590 the property is valued at 425K but I owe 200k to the banks, I would like to cash out and lower my monthly payments (analysis done). I have already started cleaning up my credit, but I have read that your team of experts can help me expedite the process. I am open to further discuss. Thanks.

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Hello

I have been watching your YouTube channel at Gustan Cho Associates and I like it a lot. You get straight to the point, which I like. My goal is to buy a house in California with a price of about $1.2 or $1.3 million. (Ideal home: 5 bedrooms, 4.5 bathrooms, 4000 square feet, in Carlsbad, CA)

I am self-employed and I have a good income even though this might be the hardest part to prove. I have been cleaning up my credit and I just paid off all my 5 derogatory credit tradelines from the past. With my current derogatories my scores are as follows:

Experian 645
Transunion 661
Equifax 714

I expect that my scores will move up in the next two months since I took care of all the “past problems” and I have a perfect payment history in the last 36 months. I am a US citizen but I have lived in Northern Ireland / UK for the last 4 years. I still maintained a US address but I have not filed my taxes in the last 4 years. Our goal is to move back to America at the end of June of 2021. Ideally, we would like to move into our own home instead of having to rent. We used to live in Carlsbad, CA 92009 for about 10 years and we would like to buy a house in the same town or area if possible. House prices in Carlsbad are all more than $1 million. I have 3 children. I can provide an income from accounts in the UK. But I don’t pay taxes there, either. My monthly income varies but it is over $20,000 per month. But all is not really official or clearly declared. I have a business account from 2020, which has a turnover of over $500,000 so far. I have about $50,000 saved and I believe that I will have about $100,000 by January. I am hoping to have about $200,000 by the end of June for a down payment.

Here are my questions:

1. When should I transfer my money to my US bank account? This year or January 2021?
2. I saw your video on Non-QM loans, which seems like a good idea for my situation. Is this still the case?
3. Would it be possible to qualify even earlier than June for a mortgage?
4. Do you also need my wife’s credit to be fixed? She is a stay at home mom. Her scores are between 650 and 680 with about 8 derogatories.
5. What kind of mortgage could I qualify for?
6. Do I need to file my taxes now and if so, for what income? I need a tax consultant…
7. Can I avoid providing a tax form?
I am happy to send you more information, etc.

Thanks for your help.

I just completed my Chapter 13 plan and received the Final Decree the class is closed. I have been timely throughout my repayment plan. I’m looking to now purchase a home.

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