Legal Mortgage Advice

[TwistedWrangler]

HELP! I am curiuos if anyone can answer a question for me. I know that there are some mortgage brokers as well as a few wise being s out there so well hope. Just short of 2 months ago we signed the purchase agreement on our home we are selling and scheduled closing for May 23rd. The purchaser was pre approved for an FHA loan pending inspection. Last week they were sent a closing packet. We recieved notice today that they were approved by the first underwriter, paperwork was held up due to work load. During this hold up the broker had some guidline changes. The paperwork now has made it to the second underwriter and because of the new guidlines they have been declined. So now for two months we have wasted our time driving countless miles at $3.85 per gallon and hours upon hours of researching property, homes buidlers etc to find out that we are not going to move. Is there any action we can take against the lender? I am not a sue happy person but this has my wife and I both very upset. Also, is this even legal since they were preapproved under the old guidlines and changes made during the process has now made them unapprovable ( if thats a word!). Any help would be greatly appreciated. I am going to settle down for a couple days and then decide if I want to contact a lawyer. In the meantime I have an appt tomorrow to get pre-approved for our new home maybe this wont be needed now.

[con*man]

I can't help you with your problem, but I can wish you luck. They say everything works out for the best. I don't think you will be able to do anything about it, but then I realy don't know the law where you live.

[admar2]

I hope you got some earnest money up front.


I'm no lawyer, but I'm pretty sure that's all you'll end up with.

depends on exactly what the contract says, but I bet they are covered since its no fault on their part.

hope it works out for you though.

[Gordon]

Most contracts include contingencies for funding. As a purchaser, you must be assured you can get the money before you assume the final obligation to buy. If you cannot get the funding, in most every instance, you can get the earnest money back from the seller (or escrow agent).

As a seller, you usually must accept a finance contingency, but can limit the time. As long as the timelines are met, you probably have no recourse.

If the buyer is "weak" credit-wise, this kind of thing is more apt to happen, or if the buyer is putting very little down and going for a high loan to value amount.

I'd re-read those details and/or ask your agent for clarification. I'm guessing that you're out of luck, but can't say for sure.

As a seller, one is often feels pressured into taking weak deals, or ones that can lead to difficulties.

I don't know what is standard in your area, but your agent can tell you. He/she is working for you, so make them earn their commission, that you are paying.

All that said, have your agent work to save the deal - it may be able to be tweaked. Each and every transaction is different.

Sorry for your woes, I do hope it works out.

[TwistedWrangler]

Unfortunately the earnest money is theirs due to the financing being turned down. My problem is that they were pre approved and then the company changed their guidlines during the process. Their realtor is at fault there for dragging her feet and not following up. The buyer says that they are done, she is in her 30's and he is in his 50's neither one ever owned a home. They said this was too stressful and they are going to stick with renting.

[Gordon]

If the buyer was on the fence, credit-wise, slight changes (due to all this sub prime stuff) can cause this stuff. Your realtor should have been beating on their realtor to perform, but it seems as though they did what they were supposed to within allotted time.

When I sold my last house (2005), I would not take an offer unless the buyer was pre-approved, then gave them 10 days to get a commitment. It may be realistic to give 30 days for a commitment in today's climate.

I also had a very experienced realtor working for me. I was also a tad tough on him. I felt that for the 15K he got, he needed to be working hard for me. Don't get me wrong, I was fair and upfront. It's just that I expect a lot for their commission.

Good luck in this next cycle, but keep in mind, it is a tough time to sell right now.