Home Buying in New York>Question Details

M&t, Home Buyer in Forest Hills, NY

bank issued commitment letter but no loan

Asked by M&t, Forest Hills, NY Tue Aug 2, 2011

bank issued commitment letter but no loan

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BEST ANSWER
T could be that the building was not been approved.
Again you should ask your loan officer
0 votes Thank Flag Link Tue Aug 2, 2011
Both your agent should have checked and the loan officer should have checked if it was fnma approved before showing you, before you made your offer and definately before you made formal loan application.
0 votes Thank Flag Link Thu Jul 11, 2013
upon selling my condo.. I am waiting for buyer to obtain a commitment letter 45 days from signing the sale agremment,, which says she must work 30days first she only starts her job on that date and her realator said she will have it is it possible? I would like out of the contract how can I do it?
0 votes Thank Flag Link Thu Jul 11, 2013
Consider this a blessing even if it was wrong for the bank to issue the commitment without thorough review of the collateral. If you bought this home via private money or cash, you would not be able to sell it for the same issues. Why would you want to be in building with $4M in repairs? Granted I don't know the size of the project or the extent of the defects, but it sounds like a lot. Non-incidental (you said incidental but i think you meant non) income on a condo makes it automatically unwarrantable for FNMA. As FNMA/FHLMC buys most of the mortgages these days, barely anyone will lend on such a property. If the banks don't want to lend on it, it should be strong hint that you should not want to buy it. If you haven't already, find another property (I realize this post is about a year old). I don't know why everyone else here is steering towards forcing the bank or finding another way to finance this transaction. If you look from the perspective that banks want to lend money responsibly you would have a better understanding. Their mortgage division doesn't make money unless they do lend. FNMA and FHLMC make guidelines for responsible lending prudent risk management. Keep this in mind whenever you apply for a loan.
0 votes Thank Flag Link Tue Jul 17, 2012
Thank you Mr. Riddle for your advice. We went to attorneys today that want $10,000 retainer fee to start even though we did everything in good faith we still could lose and have huge Attorney fees on top.
We are so depressed, disgusted and stressed.
Your answer gave us hope and for that we thank you:)
0 votes Thank Flag Link Wed Aug 24, 2011
First. Fire your Agent! Next, File a case against him or her personally, then one against the brokerage firm (s)he works for. Next file against the Sellers Agency of record as well as the Seller. Do this in Small claims court. Total cost of action 100.00 bucks. Cause of action is as such. Agent failed to inform of knowledge that basic Due Dil would have uncovered. In NY you have a right to proof of Statements (underlying Debt, Heating,water,sewerage)
Your realtor failed more likely then not, to request these items!
Their broker Failed to properly supervise (s)he.
Seller, Failed to disclose as required by law! I don't they disclosed much of the required items as well! I wonder if you were even suited with the required Agency disclosure forms! To make matters even better to your favor. File a motions for discovery against all parties. I bet you will get your money back quicker then you ever thought. A meeting of the Minds happens when relevant issues are conveyed and accepted! Not just that you like the place! Go for Blood! Settle for money!
0 votes Thank Flag Link Wed Aug 17, 2011
Hello, a commitment letter is saying that based on the documents you have submitted so far you qualify for a loan and they are willing to give it to you. There's a big but....that follows that commitment. You will also have a list of conditions to fulfill in order for the bank to say they will clear to close your deal and wire the money. So look at your commitment closely and see what else the bank wants in order for you to complete your loan process.

I hope this answer helped you.
Web Reference: http://www.RhondaHolt.com
0 votes Thank Flag Link Fri Aug 12, 2011
Thank you so much for your valuable answers and recommendations (Especially Mr. Hall).
Update from Seller: They will take a $10,000 and return the rest of deposit.
Not at all fair since we did nothing but act timely and in good faith. Not sure what legal fees could end up being so exploring all options. Will keep you posted.
Thanks again.
0 votes Thank Flag Link Tue Aug 9, 2011
I would recommend Adam Leitman Bailey. He has a track record of winning cases. His firm has represented buyers and gets their down payments back. He has made a name for himself the last few years winning big settlements. He is considered one of the best real estate attorneys in NYC. although his firm is considered small compared to many law firms.

Below is the link to his firm's website. Good Luck!
Web Reference: http://www.alblawfirm.com/
0 votes Thank Flag Link Mon Aug 8, 2011
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Thanks for your replies. I contacted other lenders (private as well) but the preliminary review of bldg won't allow them to loan based on their guidelines and the bldg having bad financials. I wish we were told this from the beginning. Can anyone recommend a good litigator or RE Atty that won't charge us a fortune.
Many thanks.
P.S. We did use a mortgage broker and our loan was with Wells Fargo
0 votes Thank Flag Link Sun Aug 7, 2011
Hi M&t,

I'm sorry to hear about your situation. It is not uncommon. Some of the best buildings in Manhattan that have never had problems before are facing financing issues from the big government backed banks (FNMA) due to new regulations and guidelines that are changing everyday.

A financing contingency in a contract is no longer enough to protect a buyers deposit. Many NYC real estate attorneys are adding language to sale contracts now that include "funding from lender" a commitment letter is no longer enough although a lender should approve the building before a commitment letter is issued.

There are many private community banks that did not take TARP money, have their own deposits, don't sell mortgages to the secondary market, are more solvent than the big government "bailed-out - too big to fail" banks that have their own guidelines.

Emigrant Savings, Astoria Savings and Apple Bank for Savings come to mind. You should contact a mortgage broker. These days it is very important to work with a good mortgage broker rather than a loan officer at a bank.

Good Luck

Mitchell Hall, Associate Broker
The Corcoran Group
mhall@corcoran.com
0 votes Thank Flag Link Fri Aug 5, 2011
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
I don't know what bank you went to but the underwriter is supposed to check if the condo is FNMA approved (if they are planning to sell the mortgage to them). If the commitment did not state that the condo needed to be FNMA approved, then the bank must do a spot approval for the condo.
Lawyers do not check to see if condo associations are FNMA or FHA approved. That is the job of the lender who wants to sell to them. I would suggest that you speak to your lawyer about your commitment and see if they think you should sue the lender.
If you still want to purchase the unit, you need a private lender. Contact me if you want to go that route.
0 votes Thank Flag Link Wed Aug 3, 2011
Thank you for your replies. Everyone agrees we acted promptly and in good faith but Bank states lack of collateral and Condo just lost FNMA approval. Assessments of over 4million for defects and incidebtal income among a host of things cited as why loan was rejected. Contacted another lender and they won't lend either.
First time buyer and thought lawyer would have told us this when he reviewed bldg. We have emails from broker and atty stating bldg finances were good and there were no assessments coming.
Now owner wants to keep deposit b/c bank issued a commitment letter.
What a nightmare. Need a litigation atty. Any suggestions besides stay a lifelong renter:(
Thanks.
0 votes Thank Flag Link Tue Aug 2, 2011
T could be that the building was not been approved.
Again you should ask your loan officer
0 votes Thank Flag Link Tue Aug 2, 2011
Did your loan officer inform you as to why...did your financial situation change since the commitment was issued....
0 votes Thank Flag Link Tue Aug 2, 2011
I would recommend calling the bank and asking them why you haven't received the loan. Sometimes it's just red tape, it could have something to do with the appraisal or there could be an issue you are not aware of. If the bank is not going to give you the loan you need to get one from another bank quickly. If you are trying to obtain a high balance conforming loan you need to get moving before these type of loans expire on 9/30/11. After that date those loans will be reduced to $625,500. Additionally, your attorney will need to tell the seller's attorney that you are obtaining a loan from another bank so there are no potential problems.

Good luck,

Ross Ellis
Licensed Real Estate Salesperson
Member of Real Estate Board of New York
Halstead Property, LLC
212.317.7828 direct
646.472.7875 fax
770 Lexington Avenue, 10th Floor
New York, NY 10065
rellis@halstead.com
0 votes Thank Flag Link Tue Aug 2, 2011
You've made a statement not asked a question. A commitment letter would occur before the loan itsself. The Bank representative would be at the closing to present the check to the sellers or their bank, not you. You don't get the check, full stop. Now, did you mean they backed out of the deal? If so, say so.
0 votes Thank Flag Link Tue Aug 2, 2011
Banks can always whip out a Commitment but they should only do so AFTER the appraisal. Even then this does not mean the mortgage is coming. It really depends on the property. I had a property recently and my buyers received the commitment, the aztech recognition agreements but at the 11th hour the bank pulled out. Unfortunately, banks have really made things tough. So, be patient and lets hope that the mortgage and your property are approved by the bank.

Nick Rafello, V.P.
Associate Broker
The Corcoran Group
212-444-7852 office
nrafello@corcoran.com
0 votes Thank Flag Link Tue Aug 2, 2011
I'm sorry to hear that, not sure what the issue is but contact Patricia Lavigne of Manhattan Mortgage, she's at 845-234-5472 or plavigne@manhattanmortgage.com. Please note I do not receive compensation for referrals. Best of luck and always take it to the mat!!


Please Contact:Tony Lara
Licensed Real Estate Salesperson
Charles Rutenberg Realty
127 East 56th Street, 4th Floor
New York, NY 10022
(212) 688-1000 x 435
0 votes Thank Flag Link Tue Aug 2, 2011
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