Stafford Loan Mortgage Problem

[ExtraAverage]

I have spent a good portion of the day looking through FAQ's, thread searches, and previous posts to answer my question/problem. Not having found anything similar, I come here to post my problem to see if there are others who have it, or better yet, have a solution.

I am trying to get a mortgage application approved for a home. Having successfully managed the many hoops and hurdles up to this point, my mortgage lenders are requiring I provide them a letter from my student loan servicers/lenders that says I am in deferment/forbearance for at least one year from the closing date. The problem is that when I contact my student loan servicers/lenders to provide this letter they tell me they can do no such thing. Most of my student loans (150K+) are federal Stafford loans, and as such, are required to go into a 6 month “grace period” following in-school deferment (I graduate med school in June). I cannot waive this grace period nor can I request my Stafford loans be put into deferment/forbearance early, according to a "federal law" cited by the student loan servicers. The best they can do is send a letter to my mortgage lender that says I will be "eligible" for forbearance after the grace period ends in December. So, I had them send this letter which was determined to be insufficient by my mortgage lender (who contacted me again today saying they need a letter that says I am "in forbearance.") After explaining the above, the mortgage lender said they have never had this problem in the past.

This is now the second mortgage lender I have gone through this process with, both seem befuddled by the fact that I cannot put my Stafford loans into forbearance after graduation. Both are banks who claim they have worked with "many other" soon-to-be-residents and "never had this problem." The only option they have given me at this point is offering a home loan with 8.5% interest. So my question is has anyone else had this problem? If not, is there anyone out there who will be graduating in a couple months, has entered into contract on a home, has federal stafford loan debt, and has been able to secure a home loan with a decent interest rate?

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[pem8erly]

Can you request to have your loans enter repayment now rather than be in-school deferment? They may not be able to forbear your loans while they are deferred or in grace but they should allow it if you are in repayment.

Loan companies are pretty much 1st degree thinkers. You have to be precise when you make requests. While in deferment if you request forbearance they will reject your request unless you specify to remove the deferment status first even if that seems too logical to point out.

I was able to get one company to agree to put my loans into forbearance right after my grace period expires and write a letter to that effect

 

[Kris1]

If not, is there anyone out there who will be graduating in a couple months, has entered into contract on a home, has federal stafford loan debt, and has been able to secure a home loan with a decent interest rate?

Yes. I was able to circumvent this problem. Try speaking to the financial aid rep at your school and get the letter from him/her. Being that he/she has worked more closely with you the letter can be custom tailored. My financial aid counselor wrote a letter stating that I was "eligible" for deferment and my lender didn't like that. He called the counselor directly and asked her to change the wording, so she did.

 

[ExtraAverage]

First off, thanks to pem8erly, as I followed up on your advice to ask my student loan servicer to put my student loans into forbearance after my grace period. They even sent a letter stating this fact. The unfortunate part is that I have 2 student loan servicers and only one agreed to do this. The other, the dept of education, refused to put my loans into forbearance because they cannot do so until the loans are out of the grace period (which, by the way, is "mandatory" and I cannot request them be removed, nor can I request my loans be put into repayment before this grace period is over.) The Dept of Ed said they cannot send a letter out that says my loans are approved for forbearance because a determination of this is not made until the very day the grace period is over. I actually read the management the letter sent out by my other servicer. They seemed confused about this, and didn't understand how the other servicer could send out a letter before the grace period is over. After 2 hours of talking, I came to a dead end and the only thing I could swing was agreeing to have the upper managment person have a conference call with me and my mortgage lender. So, I have sent in the letter for one servicer and hope that is good enough for my mortgage lender. We shall see, but I'm not optimistic.

Yes. I was able to circumvent this problem. Try speaking to the financial aid rep at your school and get the letter from him/her. Being that he/she has worked more closely with you the letter can be custom tailored. My financial aid counselor wrote a letter stating that I was "eligible" for deferment and my lender didn't like that. He called the counselor directly and asked her to change the wording, so she did.

Interestingly enough, I have tried this. My financial aid counselor wrote me a letter that said I will be entering forbearance at the end of the grace period. Unfortunately, the bank I am working with rejected this and said any letter other than from my servicer or lender is meaningless.

 

[anhoi]

I'm having the same issues. I've spoken to about six lenders, many vary in their responses (not everyone knows about the new student loan changes)...of note, I've learned today that some lenders will count student loans in forbearance irregardless of the length into your debt-to-income ratio. If anyone has worked with a lender that has indicated student loans in forbearance are okay, please do let me know, thus far I've been shot down by the major banks (BofA, WellsFargo, USBank - they told me to go to a local branch which I may try).

 

[pem8erly]

I went with Wells Fargo and they counted my student loans in my debt to income ratio.

I think a local bank or credit union may be your best bet unless you happen to find a company that is still doing doctor loans.