Home Buying in Cleveland>Question Details

Josin, Home Buyer in Cleveland, OH

Was pre-approved for a home, then denied one day before closing..

Asked by Josin, Cleveland, OH Sat Jul 20, 2013

Was pre-approved for a home, good faith paper saying so, paid appraisal, ernest money and home inspection, final week of close they now say we are denied. The underwriters went through all of our stuff and we were still approved until they needed one last thing and that was to verify if my wife was hourly or commission paid, even though they had verified she was hourly paid 2 weeks before they denied us, they said that was the ultimate reason why they fully denied us, even after it was verified a second time right before the denial. Is there any legal action I can take? Anyway of getting any of this money back? ALSO- the sellers moved out of state and the real estate agent gave us permission to move in before the final close, so now we are living in a house we are not approved for...what do we do?

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Call your agent/ broker right away. You may even want to speak with a real estate attorney about your situation. Hopefully you can find another lender that will approve you for a new loan.

In the meantime, you may want to work out an agreement to compensate the seller for your time living in the home until your financing can be approved.
0 votes Thank Flag Link Sat Jul 20, 2013
I agree with trying a different lender ASAP who will look at your information without any application fee. Try Shurell Stevens 216-214-7129. She has been a magician lately with some of my more difficult financed clients. Unfortunately, recourse with the lender is extremely difficult.
0 votes Thank Flag Link Sat Jul 20, 2013
This is fairly common. A pre-approval is not to be taken as an approval. This simply means that the borrower has applied for consideration and the lender is committed to work with them toward qualifying for a loan.

Unfortunately, it's often very far into the buying process before the lender clearly understands there are financial factors that do not allow the applicant to qualify for funding.

An attorney would be able to advise you best on your course of legal action.

0 votes Thank Flag Link Sat Jul 20, 2013
Sorry to hear about this mess of a situation. Do you have a buyer agent? If so, they need to get on the ball and try to get you to another lender asap.

If I were your agent, I'd be scrambling to get you another loan. There's still a good chance you can be approved with a different lender.

The good news is the seller wants to be done, you want to be done, now it's just a matter of getting it done! All parties are on board for finalizing this.

A good lender will look over everything and see where you stand. You may need a 30-60 day extension and perhaps rent that home for a month or two from the seller until you can get your loan situation covered. All this needs to be done in writing. I'm wondering if there was something that needs cleared up on either of your credit reports? That could take 30 days or so to clear.

The seller's agent should have never given the green light for early occupancy since they should know nothing is final until title transfers.

Cecilia Sherrard
RE/MAX Real Estate Group
Northeast, Ohio
Web Reference: http://www.YouShouldOwn.com
0 votes Thank Flag Link Sat Jul 20, 2013
I am so very sorry to hear of your experience. Especially now that you and your wife have moved in and the seller has relocated. Would the seller be interested in a lease to own type of scenario?

Did you sign an Addendum for Occupancy Prior to Title Transfer?

The first page of your purchase agreement should have a Finance Contingency - as long as you applied for your loan in the amount of time provided you should be able to get your Earnest Money back.

I would be happy to speak with you to discuss.
0 votes Thank Flag Link Sat Jul 20, 2013
Wow, this is a pretty sticky situation. Anything can happen between the time a contract is accepted and closing. Your contract should have been contingent on you procuring financing. If it was, you may be able to get your earnest money deposit back. I'd talk to your real estate agent and ask them what your options are on that situation. As for the appraisal and home inspection, that money is gone.

Finally, you are living in a house that isn't your property. The seller's agent should have never let you move in before closing, knowing that these things can happen. I highly recommend moving out as quickly as possible.

A bank can, for just about any reason, deny someone a loan all the way to closing. I don't think you have any legal recourse against them, but it can never hurt to talk to an attorney.
0 votes Thank Flag Link Sat Jul 20, 2013
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