Does the mortgage commitment need to be signed by the borrower (buyer) to be considered valid?

Asked by Martha, garden state Wed Jun 18, 2008

There are conditions on the commitment. If the buyer doesn't agree to the conditions, how can the seller have any confidence that they may be met? Also, if there are conditions, isn't it more like a pre-qualification than a commitment?

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Gil Lopez, , Metuchen, NJ
Wed Jun 18, 2008
In all real estate contracts, one of the contingencies is that the buyer secure a mortgage commitment. It is my understanding that once the bank or mortgage co. issues a commitment letter, that satisfies the contractual requirement. Although a signature is required by the lender to indicate that the buyer accepts the mortgage commitment, if the buyer does not sign the commitment, they can not back out of the transaction since the issuance of the commitment letter satisfies the contractual requirement.
1 vote
James Joseph, , 06281
Fri Aug 8, 2008
Hi Martha,
Great Q's!
Yes a conditional commitment is similar to a "pre-qual" You still do not have a hard deal because there are contingencies still involved.
You need to get a time committment as to when to expect these conditions will be met that is acceptable to you.
All the best,
James Joseph
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Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Fri Aug 8, 2008
Lending answer:

Your buyer does not have a Pre-Qualification; he or she has a Conditional Loan Approval.

Every Loan Approval starts out with a list of conditions. Even for a perfect borrower, conditions such as an acceptable appraisal, clear title, title insurance, verification of funds to close will be listed on the Commitment Letter. These items must be "cleared" by supplying the appropriate documentation to the underwriter, and the underwriter must approve the documentation. Once all of the conditions are "cleared" the underwriter signs off on the Approval and the loan moves to the lender's closing department to prepare the loan package.

This is the standard practice in the industry to fund a mortgage. A buyer doesn't have to "agree" or "disagree" to the conditions in the same way he or she would agree or disagree to conditions in a purchase agreement. It is mandatory that they be cleared before the lender will send the loan package and funding to closing.

I've seen Commitment Letters with 40+ conditions... and I've seen them with just 4. But if your borrower has a Commitment Letter, you are close to finalizing your sale.
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Mary Petti, Agent, Edison, NJ
Sat Jun 28, 2008
A mortgage commitment is just that, a promise by the lender to loan a buyer money for a purchase. Typically the pre-qualification has conditions like subject to credit check or subject to appraisal of the property by the mortgage lender. The commitment is typically issued AFTER the appraisal is done. A commitment is usually signed by the buyer, a prequalification is not. What were the conditions in the letter you saw? That might shed some light on what you actually received.
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Jeanne Feeni…, Agent, Basking Ridge, NJ
Wed Jun 18, 2008
Hi Martha, the mortgage preappoval will have conditions to be met - completion of submission and approval of borrower's application and satisfactory property appraisal. The issuance of the Mortgage Commitment signifies that those conditions have been met. There may be some procedural matters remaining to clear underwriting, but as a general rule, once the Mortgage Commitment has been issued by the lender, you have successfully cleared the Mortgage Contingency clause of your contract and should be able to breathe a sigh of relief. Unless there is a change that affects the buyers ability to borrow -such as employment termination - you should be good to go.

Talk to your lawyer for complete clarification but I do not think that the buyers signature is required for the mortgage commitment to be considered valid. The commitment says the bank will lend them the money.

Good luck to you!
Jeanne Feenick
Weichert Realtors
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