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Can a lender arbitrarily rescind an approved mortgage application because they realized after they approved it that they don't have a lending program for the type of loan they originally said they did, which had caused me to allow them into my credit report and financial status? If anyone has any info on laws/statues regarding this topic to share, it would be greatly appreciated.
Can a lender arbitrarily rescind an approved mortgage application because they realized after they approved it that they don't have a lending program for the type of loan they originally said they did, which had caused me to allow them into my credit report and financial status? If anyone has any info on laws/statues regarding this topic to share, it would be greatly appreciated.
Short answer: yes.
Long answer: Please define "arbitrarily" as it applies to your situation. Also need to know what you mean by "approved - - " was a Commitment Letter issued, post-underwrite, or by "approval" do you mean a pre-qualification letter with sufficient fine print to indemnify the lender?
Need a lot more information. It seems unlikely that the lender "realized" that they don't offer the loan program for which they "approved" you. Not trying to be a jerk here, although it seems to come naturally, but if you could please elaborate, then so can we.
Most communication was done by phone because home was in different state then where I live. Loan officer verified with underwriting that they were able to do the loan prior to completing application. All necessary paperwork was provided and verified and the loan officer was able to tell me on the phone that the loan has been approved and even the interest rate. The last step was an appraisal which caused the manager of the bank branch to realize the type of home (which had already been known and was given the okay by someone in underwriting) to then rescind the application. Was told, "Sorry but someone in underwriting answered the question wrong."
Something similar happened to me a few months ago when I called about refinancing after a divorce. A wrong answer to the first question I asked resulted in me going through the entire process yet being denied the loan I wanted (30 year fixed) and instead offered a loan I didn't (adjustable rate). While they didn't actually rescind anything I did refuse to close.
Now armed with the CORRECT info I'm in the process of trying it again.
Most communication was done by phone because home was in different state then where I live. Loan officer verified with underwriting that they were able to do the loan prior to completing application. All necessary paperwork was provided and verified and the loan officer was able to tell me on the phone that the loan has been approved and even the interest rate. The last step was an appraisal which caused the manager of the bank branch to realize the type of home (which had already been known and was given the okay by someone in underwriting) to then rescind the application. Was told, "Sorry but someone in underwriting answered the question wrong."
This is a home currently mortgaged. Just went to this lender to refinance to a lower interest rate. Shouldn't matter if the home is a log cabin, a houseboat or whatever; what matters in my opinion is they knew in advance of processing the application what it was and underwriting said they would lend on it. Then because the person in underwriting told the loan officer the wrong info, now they want to act as if the application never happened. I still have a hard inquiry from them that lowered my credit score, hours of paperwork gathering and proving creditworthiness, AN APPROVAL POST UNDERWRITING...and then they tell me oops, our bad!
This is a home currently mortgaged. Just went to this lender to refinance to a lower interest rate. Shouldn't matter if the home is a log cabin, a houseboat or whatever; what matters in my opinion is they knew in advance of processing the application what it was and underwriting said they would lend on it. Then because the person in underwriting told the loan officer the wrong info, now they want to act as if the application never happened. I still have a hard inquiry from them that lowered my credit score, hours of paperwork gathering and proving creditworthiness, AN APPROVAL POST UNDERWRITING...and then they tell me oops, our bad!
Is it really a houseboat? Log Cabin - - property type does matter - - and even if someone gave wrong info, the lender's hand can't be forced to lend. BUT if you paid for inspection, appraisal, water test, etc., I'd think the lender should reimburse you.
This is a home currently mortgaged. Just went to this lender to refinance to a lower interest rate. Shouldn't matter if the home is a log cabin, a houseboat or whatever; what matters in my opinion is they knew in advance of processing the application what it was and underwriting said they would lend on it. Then because the person in underwriting told the loan officer the wrong info, now they want to act as if the application never happened. I still have a hard inquiry from them that lowered my credit score, hours of paperwork gathering and proving creditworthiness, AN APPROVAL POST UNDERWRITING...and then they tell me oops, our bad!
Property type most certainly matters, as does the rest of the approval. Until a loan is funded, the lender can refuse to lend for a number of reasons. If you suspect you are being discriminated against, it is your responsibility to report it. One credit pull won't do serious damage to a credit report, unless there's a history of multiple pulls, almost always when a score drops, there's more than just a pull. You may not be aware, but it's likely something else changed from the last credit report. How long ago was it and how many points did you lose? But until an appraisal is issued and reviewed and the loan approved, you have a big, fat maybe. You can certainly file a complaint, but at the end of the day, no real harm was done. Doesn't mean it doesn't stink, but it happens.
Per SmartMoney's post - "at the end of the day, no real harm was done." The inquiry on my credit file will be there for two years. When I go to another lender, they will see that inquiry from that institution and will research why they didn't fund the loan. I know this because I worked as a credit investigator for a lender. What also happened during the course of this application process was the fact that the original application was turned down due to them sending the appraiser out too early and the home hadn't had the electricity turned on yet so he submitted his report as "insufficient collateral". They had to re-process thru underwriting again and when it was time to get the appraisal done for a second time, the original bad info from the person in underwriting was discovered and the application was rescinded. The definition of rescind is "to cancel, reverse, revoke, repeal." Their inquiry has left a permanent mark due to multiple errors and incredible incompetence. No where in my initial request did I ask anyone on this forum for help in how to make them fund my loan. I gave a very brief synopsis of the situation and was hoping someone could help in sharing any knowledge they may have regarding any "laws or statues" that would give me guidance on what rules they have to follow when leading someone into filling out an application with them or a law that might tell me how I might get this institution to restore my points and remove their inquiry. Thanks to all for sharing your input and opinions but unfortunately I was unable to get my points across succinctly enough for your answers to help me.
Per SmartMoney's post - "at the end of the day, no real harm was done." The inquiry on my credit file will be there for two years. When I go to another lender, they will see that inquiry from that institution and will research why they didn't fund the loan. I know this because I worked as a credit investigator for a lender. What also happened during the course of this application process was the fact that the original application was turned down due to them sending the appraiser out too early and the home hadn't had the electricity turned on yet so he submitted his report as "insufficient collateral". They had to re-process thru underwriting again and when it was time to get the appraisal done for a second time, the original bad info from the person in underwriting was discovered and the application was rescinded. The definition of rescind is "to cancel, reverse, revoke, repeal." Their inquiry has left a permanent mark due to multiple errors and incredible incompetence. No where in my initial request did I ask anyone on this forum for help in how to make them fund my loan. I gave a very brief synopsis of the situation and was hoping someone could help in sharing any knowledge they may have regarding any "laws or statues" that would give me guidance on what rules they have to follow when leading someone into filling out an application with them or a law that might tell me how I might get this institution to restore my points and remove their inquiry. Thanks to all for sharing your input and opinions but unfortunately I was unable to get my points across succinctly enough for your answers to help me.
I say this with respect to you: SmartMoney is the most informative, friendliest, most helpful member on this website. Never snarky or mean, always completely helpful to everyone across the entire lending spectrum.
Also - tap the brakes on the whole "permanent mark" stuff. You gotta lighten up, you sound like you're screaming into a HAM radio. It's all gonna be okay.
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