Home Buying in 95831>Question Details

Frugal13, Home Buyer in Sacramento, CA

Can lender send statement of credit denial if buyer walks away for financial comfort?

Asked by Frugal13, Sacramento, CA Fri Jan 4, 2013

Sale was 2 weeks away from closing--lender had approved loan up to that point, yet I received a Statement of Credit Denial, Termination or Change stating that reason was "value or type of collateral not sufficient". Should I challenge this, and will it hurt me when I try to buy again?

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If a loan has already been approved, and then it is cancelled or denied, that notice is required to be sent out. No one except for that lender & you would know you were denied.

Further, the reason for the denial is not based on anything about you personally, it was because the property in question didn't have sufficient value or the type of property couldn't be approved. According to that notice, you could come back to that same lender and re-apply for a different property which qualifies, and assuming your personal situation hasn't changed for the worse you would likely be able to get the loan.

Shane Milne | Lending in all 50 states | NMLS #81195
1 vote Thank Flag Link Fri Jan 4, 2013
You are welcome. Any loan that is approved and then not closed on, is a denial. It's a federal requirement to send that statement out. Don't take personal offense, just throw it in the trash and don't look back. Perhaps the lender did some looking into the property and found something they didn't like, but it has no ill effect on you being able to get a new mortgage from another lender.
Flag Fri Jan 4, 2013
I choose to walk away, so it shouldn't have been a denial, yet the notice implies that the lender denied (all was approved at the time I walked away). It's misleading, and that's my concern--it seems almost punitive for walking away.

I will check with the loan officer, but I wanted to know if it was something I should be really concerned about, or if it's SOP.
Thanks for your time.
Flag Fri Jan 4, 2013
What was the condition of the property? Did you do a inspection or what is the conditon you think that the property isn't qualifying for. The property may qualfy for 203k financing to do the neccesary repairs. However if the value came in low, you would have to get an idea of projected appraised value with repairs. There is to much missing to read between the lines to know what to tell you. I can look at what you have and advise You could be DU Approved within an hour. Here are links to study and consider.

http://www.under640ficoscoreloans.com/Pages/Conventional.aspx

http://www.under640ficoscoreloans.com/Pages/CHDAPLoans.aspx

http://www.under640ficoscoreloans.com/Pages/HalfPercentDown.aspx

http://www.under640ficoscoreloans.com/Pages/ContactSheryl.aspx
Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
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0 votes Thank Flag Link Thu Jan 10, 2013
It would not hurt you to challenge it, but depending on what the failure of the property was--to serve as sufficient collateral, it may not be worth challenging. Like if you have an FHA loan and the property had many "health and safety" issues, the property would not qualify. If the property did not appraise at contract value, your agent and the listing agent can check market comparables and if there is a good case to present--that the property does value out--then they should make that case to the appropriate person (appraiser or loan officer?).

More than one way to resolve some property/loan problems, just depends what it is.

Good luck.
Web Reference: http://www.kyleeroe.com
0 votes Thank Flag Link Fri Jan 4, 2013
Shane gave you a great .answer. The issue seems to be the property. Perhaps it didn't appraise for the value needed to complete the loan as stated. Perhaps it was the type of property rather than the value.

Speak to the loan officer who was working with you. They will have more information and know if there is any adjustment you can make to the loan application to complete the purchase of that property or need to find another property. It doesn't sound like it was your personal qualification for a loan, just the property....but the loan officer knows best.
0 votes Thank Flag Link Fri Jan 4, 2013
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