Builder financing denied by FHA underwriter

We recently signed a contract with a builder who provides all closing costs if we can close by 12/31/08. We filed for bankruptcy in 10/05 and were discharged in 02/06. Since then we have built our credit scores back up to decent numbers. What I was not aware of was FHA guidelines about late payments. Since we included our house in bankruptcy the payment history is no longer reported in my credit report. So when our tenants became almost 3 months delinquent we let the payments slide for 30 days or more 2 times. The payment is only $550, and if I had known that I would have just paid (regardless of any hardships that may have occurred). Our loan officer with the builder's mortgage company had me write several letters of explanation, but the underwriters denied the loan twice. Now with a broker approved by the builder I may get approved but only if some items are fudged on the application. We really want this house, but.... Any advice would be greatly appreciated. Can I just say that this forum was the only thing that got me through the bk.

Thanks

Do not fudge items on your mortgage application. It is not worth it, as it is considered mortgage fraud.

Yes, late payments after a bankruptcy are extremely hard to overcome when you go for a mortgage. The theory is, you should have known how to handle your finances as a result of the BK.

In this credit market the applications are getting extra scruinty anyway, so please do not take any sort of risk by fudging numbers.

Can someone explain if the mortgage was IIB why would payments be reported as late?

Can someone explain if the mortgage was IIB why would payments be reported as late?

It all depends on the lender. Technically, our mortgage was included in bankruptcy, even though we are still paying on it and our lenders are still reporting.

We are late, about 2 months now, and I'm sure they are reporting it as such.

My mortgage is also not reported to credit agencies, but I put the house on the application. They then did a conference call to my credit union who asked them to respond, with my permission. If I had known that this would be a problem I would have sacrificed and paid. But since I knew it would not be reported I let the payments lag. Hindsight is definitely 20-20.