Will I lose my deposit?

Asked by Jjcsd, Taunton, MA Sat Mar 14, 2009

I am in the process of purchasing a home. We were supposed to close on March 9th but the week before when my husband and I went to go to the house to measure, we discovered all the pipes had been stolen and some damage to the house occurred. We love the house (and it is a foreclosure), so we're sticking through with it. The seller (bank) is going to have the pipes replaced and the damage fixed. The question I have is, I'm still waiting for our bank approval even after the supposed closing date, will I lose my deposit? Supposedly I have been approved, but the house has not (meaning they haven't said yes or no). We sent in an extension for the mortgage contingency but I believe that has expired. I'm afraid that the house will be rejected for the mortgage and I will lose my deposit. Because the bank (my mortgage bank) is taking so long to approve my 203k (we're only asking for $13,000 to fix up the house) could I still lose my deposit if it falls through?

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Matt Heisler’s answer
Matt Heisler, Agent, Westborough, MA
Mon Mar 16, 2009
Here's another thought as well - your lender has had ample opportunity to approve you loan at this point, so why is it not approved? I would consider double-applying. At the very least, you need to find out the underwriters concerns about the house, and what is holding up approval. You loan specialist should be able to give you some details, and if they can't I'd find another underwriter. I'd like to see some of the mortgage fellows voice in, but you can't wait around indefinitely for a commitment letter. You need to find the obstacles and figure out if the risk(s) are too great for that lender.

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Charlene Ble…, , Marion, NC
Sat Mar 14, 2009
Jjcsd, if your contract contained a mortgage approval contingency, and it certainly should have, and if the mortgage is denied, you should get your earnest money back. Now, since you've passed dates which in bank contracts are usually "time is of the essence" dates, it's possible the bank could do a bad faith move and keep your earnest money. However, this is unlikely since the bank was unable to deliver the house to you in a timely fashion, and that you as the buyer were are are proceeding in good faith, and you could have a civil claim against them due to your good faith efforts. I suspect the banks these days have enough legal hoops to jump through without trying to confiscate your earnest money and face another challenge.

That's all an educated guess on my part, having dealt with a bit of a similar scenario, but I am NOT AN ATTORNEY AND SO CAN'T GIVE LEGAL ADVICE. You really should speak with your buyer's agent and your real estate attorney about this matter, and perhaps do another contract extension so all parties are covered. Good luck and kudos for hanging in there!
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Charlene Ble…, , Marion, NC
Sat Mar 14, 2009
Jjcsd, I'm so sorry this is so nerve-wracking for you! My advice to you is to get your agent on the phone immediately, and voice your concerns. Tell him/her that you need to know where things stand. Ask about doing another extension. Find out how, when and by whom the damage is going to be fixed. Is it being done prior to closing by a reputable/certified plumber? Does the bank intend to escrow the funds for the repair to be done after closing? Get a contract addendum signed by the bank, and make sure your lender signs on to whatever scenario (they should, since it's a 203k loan and by it's very nature and intent is FOR repairs).

I'm not sure what time frame you're dealing with here, but get your agent on the case right now, have them talk to your lender too, or you talk to them, and find out where things stand from both sides. Having these issues to deal with is not uncommon in the situation you describe, but not knowing, or not having your agent trying to get answers and communicating with you, daily, if that's what you need, is unacceptable! good luck!
0 votes
Jjcsd, Home Buyer, Taunton, MA
Sat Mar 14, 2009
Yes, I do have a buyers agent. The seller also has an agent who deals directly with my agent. I haven't heard anything from either agent since them telling me that they were going to fix the plumbing. I wasn't sure if they were going to wait to fix everything prior to my approval or if they were already starting. This whole loan has been up in the air and if it fails to go through, I vow never to buy a house again because this ordeal has been just horrible!
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Scott A. Nel…, , 02155
Sat Mar 14, 2009
I have to agree with Rob, you really need to have your attorney review the documents you signed. There are usually very specific contract terms when dealing with a foreclosure including loss of deposit.

Are you dealing with a buyers agent to represent you or directly with the banks real estate agent?
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Rob Goodwin,…, , Easton, MA
Sat Mar 14, 2009
Good morning Jjcsd:

I am assuming that you signed a Purchse and Sales agreement . Have your attorney review it and advise you on this.


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