This may be a bit long, please bear with me...

I applied for my VA Home Loan in December 2008, around Christmas-time. The home I was looking to purchase was appraised, by the VA, at 252K. The seller agreed to drop her price.

If anyone has purchased a home before, or any big-ticket item, they know the first thing the seller/lender is going to do is a credit check. They don't even want to know your name before checking your credit.

Mine had a few bumps and bruises, after suddenly being laid off from my job a few years ago and a few personal issues that arose as a result. I steadily dug myself out and am happy to say that I'm 100% debt-free and current on all recurring payments. I've been that way for about 16 months now. My credit score averages to 693.

This process has been nothing short of a nightmare. The original closing date of Feb. 20 was missed, then I was pretty much in the dark, given random weekly scavenger hunts I was supposed to go on at the VA/lender's behest, like tracking down my divorce decree and proof of having paid my rent for the past year. Stupid stuff. I'm sure the simple fact that I live here should prove that I've paid for it. But even after providing them with 12 cancelled checks they decided, 2 weeks later, that they wanted to see the bank statements associated with such checks.

I never had a checklist of things I was supposed to provide. Every week they came up with another requirement I was supposed to satisfy, and so on and so on and so on.

So, finally, 14 weeks later, 6 weeks past the original closing date, they decide to deny me because I'm a credit risk. Again, if you were to look at an isolated period of time I'm a terrible credit risk. But overall (and recent) history I think I'm fine. What I don't understand is, assuming (and knowing) that the VA/lender was aware of my credit report/score/history on day one, why did they wait 3.5 months and then decide to deny me? They actually made me pay off an old collection account (that, long story short, I never paid because I never actually owed it, so I had refused to pay it). So, they send me out to repair my credit, then deny me because of it. Why bother wasting my time?

Anyone out there have a similar story? Any idea what I can do to get answers? Do I have any recourse? How hard is it to contact the VA and have them look into this?

Thanks in advance,
Matt

The VA does not make loans. Banks make loans and the VA provides guarantees. I am linking this to the Finance Boards so the Paul can give you a better answer.

It sounds like you had 3 things go wrong. You were dealing with a rookie loan officer, the underwriter was probably overwhelmed with a high workload and had to re-stipulate some of the required conditions, and it sounds like there was likely a bankruptcy involved somewhere.

Any derogatory credit within 2 years of a bankruptcy is a no go. You ahve to have 24 months of clean credit after a BK. Secondly, you should have been given a list of everything you would need at the initial time of application. Underwriters will stipulate for things after first reviewing a file. That is routine. But to get stipped on other things after the fact tells me that the loan file that was sent up was sloppy and the underwriter had a hard time making heads or tails of it.

Paul
See my profile for contact information

I agree with a lot of what you said, but thankfully I've never had a bankruptcy, foreclosure or repossession.

You should have received a letter stating why they refused to make the loan. What is the reason?