Home Buying in Massachusetts>Question Details

Lorrie Dodge, Home Buyer in Middleton, MA

is it legal for the bank to withdraw a loan commitment the day of closing?

Asked by Lorrie Dodge, Middleton, MA Mon Jun 10, 2013

had closing date and commitment, all contingencies left, day of closing they withdrew and added more contingencies in jep of losing deposit.

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Lenders are doing a final QC Once all conditions are cleared and the loan is going to closing.

They are double and triple checking the work of the underwriter.

They are also doing a credit refresh prior to closing. This will tell the lender if the buyer has attempted to open up any additional credit. If they have that could affect their debt ratio and could be one of the reasons why the loan gets canceled prior to closing.
They will also do a verbal verification of employment to make sure that the buyer is still at their job and still able to pay the mortgage.
1 vote Thank Flag Link Thu Jul 11, 2013
Yes. If the lender determines they need more information its in their right.

Basically a loan isn't commited until its on record.
1 vote Thank Flag Link Mon Jun 10, 2013
Very interesting. Read your commitment letter as a lot of time the commitment letters are contingent on a few items. This seems worth advisement from your attorney asap about any recourse from the bank.

Good luck!

Territory Real Estate
Massachusetts Destination for Home Buyer's
617 848 5407 ext 704
Web Reference: http://territory.com
0 votes Thank Flag Link Thu Jul 11, 2013
Legal? That's for an attorney to advise and a judge to decide.

Can they do it? Yeah, probably; if you read your "commitment" letter from the bank, you'll see that it's not really a "commitment" at all.
0 votes Thank Flag Link Mon Jun 10, 2013
This is a tough question to answer, without knowing why more information or contingencies were added. All commitments are conditional. Subject to receipt of information or documentation. Anytime you have to submit additional documentation, that documentation could open the door to additinoal information being needed, which is not necesarily a bad thing, unless the documentation cannot be provided or it uncovers an issue that cannot be resolved. For example a verbal verification of emplyment with in 10 days of closing. If that is done and the lender is informed the buyer is no longer employed, that is a deal breaker and the lender cannot close the loan. That is just 1 example and there could be any number of things that could come up. I cannot stress how important it is to provide every bit of documentation that is asked for as soon as possible is. Every commitment is subject to change upon reciept of additional information.
0 votes Thank Flag Link Mon Jun 10, 2013
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