Home Buying in 85014>Question Details

j_randolph87, Home Buyer in Texas

Can I take legal action on my mortgage lender for their mistakes on delaying the closing date on a home?

Asked by j_randolph87, Texas Fri Nov 2, 2012

We have been leasing this house from the owners for over 9 months now, and we had set an official closing date for October 5th; however the lender decided to over look something in the appraisal report (we had the house appraised in June), and it was that some electrical sockets in the kitchen needed to be GFI, and they had to be replaced. Of course, that set us back several days, trying to get an electrician out to the home and inspect what needed to be done. Even though the lender initially said the appraisal was fine and there were no problems, just waiting for our file to come out of underwritting. My wife and I are stressed, and we're tired of paying money to these owner's for something that isn't ours. Please help, any advice will be appreciated.

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Answers

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We are Realtors, not Lawyers; and therefore do not give legal advice.
One thing I can tell you, is that to SUE somebody, you have to show a LOSS: Meaning that you would have to demonstrate and prove that you had a monitary loss due to their actions.

Of course, the fact that you didn't read your own Inspection to see that note about the GFI outlets, is really your fault, not anyone else's.

Compared to a lot of Buyers, you are really in a good position: You are paying about the same amount as you will with your Mortgage, but you are not responsible for the Insurance or Taxes and you are loosing about $10 a month in Principal on the loan.

Maybe you should buck-up and appreciate what you've got.
1 vote Thank Flag Link Sun Nov 18, 2012
The issue may not be that the lender had to document something more completely to comply the underwriting or other related HUD related requirement. No loan originator is going to delay the loan closing because he/she receives no pay until the loan closes.

Law suits generally only make lawyers money. Generally a lot more money and time than a sane person could or would like to invest.
0 votes Thank Flag Link Thu Aug 15, 2013
I hope you got the house closed, lenders are very cautious today and all the i's get dotted and T's get crossed before its done.
0 votes Thank Flag Link Sun Nov 18, 2012
Hi Randolph

Anyone can take legal action. But such an Action Costs Money and Compensation for
delay is questionable. Lenders are required to look at all reports very closely as they
are getting funds from Fannie and Freddie, to give you a loan.

The conditions come from the Government bodies.

Good luck.
Perry
0 votes Thank Flag Link Fri Nov 16, 2012
I would contact and attorney first. But I can tell you the GFI are more than likely not the problem. If it was not code when the house was built they would not be required now. It just sound odd to me. I would be careful with what you do for now until you speak with and attorney I assume you don't have a realtor relationship in this transaction looking out for you if so they will be a great help negotiating this issue.
0 votes Thank Flag Link Fri Nov 16, 2012
I would suggest that you contact a Real Estate attorney. I imagine there has to be a little more to it than just some GFI outlet issues
0 votes Thank Flag Link Sat Nov 3, 2012
Hi J_randolph87,

Your question is right on the money and, unfortunately, describes an issue many, many buyers must deal with. While you have a purchase contract with the seller that would allow you legal remedy if either you or the seller breached the contract, you have no such contract with your lender. It would be difficult to sue your lender over an issue for which you have no written agreement and where you did not suffer any damages.

Please understand that many loan officers try to anticipate problems up front, but once your file hits underwriting they take a much closer look at everything. It's not surprising that the underwriter caught the issue on the appraisal. These are usually issues with VA and FHA loans, and if yours is one of those then the appraiser definitely would have noted those items and the underwriter would be actively looking for health and safety issues identified on the appraisal.

My question a month after your original closing date is this: why is it taking so long? Has it taken this long to have the sockets re-wired, or is the lender taking all of this time? Once issues have been resolved, it shouldn't take more than a week in underwriting. If your LO (loan officer) is dragging his or her feet, escalate to a supervisor or branch manager. If it's a small mortgage company, get the owner to look at the file. If you are owing any per diem fees or other penalties for a late closing, it would be appropriate for you to ask your lender to pay those fees if they are the ones delaying closing at this point in time.

Once your deal is finished, you can always report your lender to State Banking if you feel that he or she was acting in an unprofessional and unethical manner. All mortgage brokers and their loan officers must be licensed, unless you are working with a bank like Citi or Chase, and licensed LO's are held to a higher standard.

Also, is this a short sale? It sounds like you as the buyer were taking on the responsibility of making the GFI repair. If this was required by your lender and appraiser, you should have asked the seller to pay for it.
0 votes Thank Flag Link Sat Nov 3, 2012
Hi JRandolph:

Of course you can. But, that is not your real question, is it?

What you want to know is if you will win and if you will be compensated for considerably more than your loss and stress. Otherwise, why do it, right?

Maybe, maybe not. Might a judge or jury award you enough to pay for what is now about a month's worth of rent, and some ambiguous amount to compensate you for the stress? Better yet, will they not only award you that amount, but now you are going to have entered into a long, protracted litigation situation for which you will pay a large sum in legal fees, and have put yourself through a great deal more stress for a significantly longer time. Do you have more money than the lender to pay in legal fees, as I can assure you they are going to fight this to the end (otherwise, they open themselves up to all sorts of lawsuits like yours)? All in the hopes the judge or jury will agree with you....

Personally, I would focus on getting the situation rectified and over with, then sit back and enjoy my new home, thankful I wasn't still involved in a legal battle six months or a year from now.

By the way, why the heck is it taking a month to fix socket problems? Makes me wonder if you are going to be asking about suing the electrician next? See Red Adair's statement below...are you getting referrals to professionals?

Or, is it just me?

Bill Parker, Loan Officer
AZ Lic# 09011570
NMLS #223607
CPA--Licensed, no longer practicing

GenCor Mortgage, Inc.
15730 N. 83rd Way, Suite 103
Scottsdale, AZ 85260
(O) 480-525-8496; (M) 602-565-3646; (F) TBD
EM: Bill.Parker@GenCorMortgage.com
Website: http://www.GenCorMortgage.com
LinkedIn: http://www.linkedin.com/in/billparkercpa

MISSION STATEMENT: To create an unbelievably enjoyable experience for my clients, while guiding them through the most important financial transactions of their personal lives. My clients know me as their Mortgage Lender for Life. I truly appreciate your referrals.

If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.
Red Adair, Oil well firefighter
0 votes Thank Flag Link Sat Nov 3, 2012
When it comes to any necessary legal advice, it's really in your best interest to consult with an attorney; don't just rely on online information....
0 votes Thank Flag Link Sat Nov 3, 2012
I would suggest that you contact an attorney to discuss the issue.
0 votes Thank Flag Link Fri Nov 2, 2012
thanks. ive saved nearly every e-mail from the lender saying that the appraisal reports were perfect, and everything was okay, and then turn right around and say, no something was wrong, we need this from the appriaser now, a whole bunch of non-sense. back in march, i traded in a vehicle and got a truck. well, not really realizing how this would back fire, last week they contacted me, saying that my initial credit report had expired and that my debt to income ratio was now different, so my file had to be sent to rural development, again. The sellers are wanting to raise the rent, and i can not afford this increase.. so all these delays are not only starting to screw me up financially, but putting my wife and i at a HUGE inconvenience, from their negligence. yea.. buying the truck may not have been wise, however if they had done their job correctly, we would have been closed already, and i wouldn't have to be dealing with this right now. am i right?
Flag Fri Nov 2, 2012
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