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AMS Helps Resolve Credit Problems to Qualify Ex-Navy Homebuyers


Erik Gray grew up in Minnesota and served as an E-5 English-Spanish translator in the Navy, stationed in Texas. He met his wife April, an E-5 in the Air Force, while they were both working in a joint service environment in San Antonio. The two have been married for 12 years.

April is an Iraq war Veteran and 100% disabled due to physical injuries and toxic exposure while serving in the Baghdad area as a prison interrogator. Erik is also disabled but cares for April when he’s not working.

After separation from the service, the Grays were living in Texas and bought their first home there, planning to raise a family. But they had a problem. Their location put them at a minimum 12-hour drive from any of their relatives, and it was important for them to raise their children near their grandparents. Fed up with long cross-country trips to visit family, they decided to move closer, choosing Valdosta, a small town in Southern Georgia about an hour from April’s dad’s home.

The Grays later sold their Valdosta home to move to Waynesville, North Carolina, temporarily living in a two-story home to assist aging grandparents. Once they were no longer needed there, the Grays decided to put down roots in the beautiful city where they had spent so much time exploring and enjoying, thinking it was the perfect place to raise a family. “Waynesville offered a small-town feel that’s slow enough to be safe and vibrant enough to be fun. So, we reached out to a lender to see what we would be approved for so we could start really looking,” says Erik. “We were floored when the lender said they were unable to work with us based on our having 27 late payments from our last mortgage.”

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When Mortgage Loans Are Sold

“We thought the lender must have been mistaken because our mortgage payment had been on autopay,” explains Erik. “We thought this was some kind of clerical error we could just get cleared up, but we were sure wrong about that.”

The Gray’s previous mortgage loan for their house in Georgia had been sold and owned by three different lenders during the time they owned the home. Mortgage companies will typically sell a mortgage they’ve originated to have more funds to loan to other homebuyers. These mortgages can be sold with or without the servicing rights. (The servicer is the entity that collects your mortgage payments and handles your escrow payments, if any.)

When a mortgage lender sells your loan or the servicing rights, you should receive two notices: your current servicer should provide notice of the transfer at least 15 days before the transfer date and the new servicer should provide notice within 15 days after the transfer date.

In looking into the issue further, the Grays discovered that the (now out of business) second owner of the mortgage had sold the loan to the third owner in the middle of a month (February) and had refunded the Grays that payment. The new owner’s autopay picked right up the next month (March) and the payment was sent but that payment was credited to February and was a month late.

While the Grays thought the payments had flowed seamlessly from one servicer to the next, they had not, and each subsequent payment being sent was technically late even before it arrived. Those “late” payments had negatively affected their credit score and were the reason they were denied by three separate lenders.

“We were being fully transparent about our situation and hoping they would help some disabled Veterans get into permanent housing, but nobody would touch us,” says Erik. There was no way to fix the credit issue, even though the loan had been paid off in full. The Grays were faced with renting cramped quarters for another year while those credit blemishes aged to the point where they could qualify for a new loan.

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Connecting with AMS

One of the Gray’s family members asked them if they had talked to AAFMAA Mortgage Services LLC (AMS). “It was like opening the door and feeling a fresh breeze,” says Erik. The Grays connected with AMS Military Mortgage Advisor Lane Campbell. “At first, we were nervous we’d be turned down, that the other shoe would drop, but it never happened. Lane assured us the late payments were not a problem and that he could help. We were beyond happy about that.”

Lane was able to guide the Grays through the process of putting together a letter of explanation (“LOX”) regarding the situation. Sometimes lenders might ask for an LOX to provide clarity and thus expedite the approval of the loan. AMS was then able to quickly pre-approve the Grays, and they got to house-hunting right away. They purchased their “forever home,” a single-story home in Waynesville, North Carolina, tucked next to Plott Creek in November 2023. In January 2024, their 13-year-old lab/shepherd mix, Tilla, passed and was buried on the property. “Had we needed to delay the house search, she would not be able to be ‘with us’ still,” Erik says. “I personally told Lane that thanks to him and the team, our family can grieve and move on together, and not leave anyone behind.”

“Every day I’m thankful there was at least one person out there, one business entity that was understanding, and was able to make our dreams come true.”

Related: 3 Ways to Save Faster to Buy a Home in 2024

We’re Here to Help

Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!