Home Buying in Benicia>Question Details

dicaro15, Home Buyer in Martinez, CA

If my loan doesn't go through and I lose my deposit can I sue the lending group?

Asked by dicaro15, Martinez, CA Wed Jun 26, 2013

I've been trying to buy a property for over a month now but it seems like the loan won't go through even though I was pre-approved before submitting an offer. I removed all contingencies last week because I was assured by my realtor and lending group that there was nothing to worry about and that the loan will get finalized very soon.
I was supposed to go to the title company and sign docs since Friday but everyday the lending group asks for more documents and gives me a different excuses.

I'm expecting my first child in less than a month and I can't keep waiting so I'm planing to cancel the purchase if I don't sign this week. Now my realtor is telling me that at this point I'd loose my deposit money.
If that's the case can I sue them (lending group and realtor) since they assured me not to worry and remove all contingencies?

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Answers

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A pre-approval is more a cursory look. It means that you meet the lenders minimum or general requirements. However, once you have an accepted offer your lender will require certain specific and updated documents that will be reviewed by underwriting. It is not unusual for underwriting to request additional, updated or clarifying docs during their review process. It they are satisfied with the documentation they will approve the loan and release it for docs.

What is unusual is that your realtor and lender would advise you to release your loan contingency prior to funding. When representing buyers it is always advisable to keep the loan contingency in place until the loan funds. This is a protection for the buyer in the event that the loan falls through at the last minute because the lender fails, for whatever reason, to issue docs, fund the loan and close escrow. Refer to your purchase agreement, page2,H 3(ii); checking this box keeps the loan contingency in place until the loan funds. When submitting a purchase offer I always advise my buyers to check this box.

If you are the one to cancel the contract than your realtor is correct that your deposit is in jeopardy. If you initialed page 7,#25, you agreed to your deposit's use as liquidated damages if you default. If you initiate the cancellation than you are the party in default.

This is America, you can sue anyone. But the better question is will you prevail? That is a question better posed to a real estate attorney.

I hope that my answer has been helpful and that you will be successful in closing escrow soon.
1 vote Thank Flag Link Wed Jun 26, 2013
If you would like we close loans here faster than anyone I know of. If you would like I can look at it, and I would be willing to call the agents and see if I can save it for you?
I would think you should be able to sue lenders for this, but unfortunately you can’t.
Unfortunately there are several things that may be happening:
1. Most lenders do not do purchase loans very well. The reason is that they just do not do a good job at it and realtors refuse to use them so they just don’t learn the ins and outs.
2. In your case interest rates have skyrocketed lately. If they promised you a rate that they do not have the ability to produce it could be $30,000n to $50,000 loss. In which case they may be doing some real juggling behind the scenes.
Are you sure your loan contingency has been removed?
Keep in mind in California, anytime you find out any new information, you can back out of the deal. it may be worth while for you to find some new information if you can.

If you would like help feel free to call my at (949) 930-1210, my cell phone is on the recording.
0 votes Thank Flag Link Fri Jun 28, 2013
P.S. - Ask your loan officer 'exactly' what the underwriter is requesting and 'why'? Then you'll know what's going on, and ask 'what they are specifically looking for from you or what are they wanting to see' to approve this loan. Then you might be able to be pro-active in understanding from the underwriters point of view on what you should do next.

Cancelling the PA is not going to get you into a home any sooner. You'll have to start the process all over again.

If you like this answer or if it was useful to you, a quick click on the green 'thumbs up' would be appreciated.

Kim Eisen
"Helping People Make Smart Real Estate Decisions since 1980"
(651) 457-HOME (4663)

http://www.QuickHomesSearch.com
0 votes Thank Flag Link Wed Jun 26, 2013
Do everything possible to see this through. Bad situation, but hopefully good ending for you. My thoughts are 'there is nothing so simple two attorneys couldn't argue about' ; )). In saying that, if it does fall through (and I really hope it doesn't for you) and you lose your earnest money, check with an attorney. Especially if the reason for the denial was something that was known to all up front; but then again, the underwriter has the final say, so . . . It may be worth a call to an attorney to consult about your options.

If you like this answer or if it was useful to you, a quick click on the green 'thumbs up' would be appreciated.

Kim Eisen
"Helping People Make Smart Real Estate Decisions since 1980"
(651) 457-HOME (4663)

http://www.QuickHomesSearch.com
0 votes Thank Flag Link Wed Jun 26, 2013
On your contract there is a spot in fiancing which states the maximum interest rate you can pay for your loan (or maybe your contract states Best Prevailing Interest), but that could be an area to consider if the lender has not locked your loan and is possibly trying to get you reapproved at higher interst rate.
In any case, you need to be communicatiing with your loan agent SOON!
0 votes Thank Flag Link Wed Jun 26, 2013
I know you are probably in a bad situation right now and i hope you can solve your situation soon. If not pleas feel free to cantact me. we guarantee our closing date if not you get compensated.




Edwin Mieles
Senior Loan Officer




Residential Finance

614.754.2754 Direct
614.324.4700 Ext 1561
877.224.7657 Fax
NMLS: 986881
edwin.mieles@residentialfinance.com
0 votes Thank Flag Link Wed Jun 26, 2013
Unfortunately, if you did remove all contingencies(including the mortgage contingency) there is a good chance that you could lose your down payment if you don't close. If your agent was acting as a Buyer's Agent you could probably sue for breach of fiduciary duty. You would need to consult an attorney for more specific answers to your question. Hopefully, it does not come to that.
0 votes Thank Flag Link Wed Jun 26, 2013
You are responsible for carefully reviewing every document you sign -- as noted on most of them, they have legal consequences. Your lender does not benefit from you if you don't close the deal, so I would assume the 'excuses' they are giving you are real concerns. Every situation is different -- I've had deals where the lender came back multiple times asking for additional documents.

My advice, be patient and provide them with everything they need. Everyone wants the deal to work, because that is how everything is compensated.
0 votes Thank Flag Link Wed Jun 26, 2013
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