Bank Screwed Up!
Ok. this stinks, I think. I have a purchase contract for a rehab property that I am supposed to close on Thursday this week (2sep). I was using conventional financing to buy the property. The purchase price is 42k. The lender quoted me and sent me an approval packet with all the disclosures for 95%ltv, stated income. I signed these and returned them, the lender assigned an appraiser who did the appraisal, it came back fine, and I of course have to pay the appraisal. Everything is done, and I close on Thursday. So no problem, right? Wrong!!! The lender calls me today and says they screwed up. They were quoting me the ltv for a full doc loan, and if I want stated I have to give 20% down instead of 5%. Well if I have been promised a certain amount, and already did all the paperwork, can they do this to me. What recourse do I have? They admit that they screwed up, but they have already quoted and approved this to me. Can I ask for some sort of accommodation for their screwup, like if I pay the 20%, can I ask for a refund on the closing costs or something. What legal rights do I have? not even sure where to post this topic. The paperwork all said 95% loan amount. I signed all of the disclosures.
Scott :-x [ Edited by scott0049 on Date 08/30/2004 ]
You can report this to the better business bureau. Everything that a lender or broker gives you, tells you, ect. Is subject to change at any given moment. You loan and costs can change up to the table and then they can still change. Everything you signed is dependent on FINAL APPROVAL not conditionally approved.
Lori
[addsig]
Well I suspect your options are pretty limited here if only because you're probably up against time constraints from the seller. One possibility is to close, refinance and then try to chase the original lender for the costs associated with the refinance.
Who is this "lender"? Is it a broker? Or a bank?
There are 95% stated programs out there - PHM, Pinnacle, Aurora Loan Services (100%), Rainland (100%), etc.
If this is a broker, I would do an amend and extend to the contract, making sure you get a break on fees/origination if you are assessed a fee to extend and have the loan submitted to one of these lenders as originally disclosed.
Not a broker. It is IndyMac Bank.
I'll probably have to change my exit strategy. I was going to fix, and l/o it. Now I'll probably just retail it after fix. I am looking at a holding period of 9-12 weeks. I am thinking to just put the extra down payment on a platinum card and if it goes past 12 weeks then take the cash out of the bank and pay off the card. I don't want my money tied up until it has to be. Any comments are welcome. Oh well, at least I have the cash if I need it. I am losing quite a bit of profit by retailing though.
I prefer the l/o just for the extra profit.
Scott
That really stinks. I just checked out their guidelines and he's right - max 80% CLTV on stated.
I'd still see if you can get the contract extended and take your complete package to one of those lenders I mentioned. Greenpoint has the best rates.
Good luck!
Is your purchase contract contingent on your getting financing for X$ or Y% of LTV? If so, maybe the contract is dead on its face because the lender's "commitment" is for different terms than as stated in the purchase contract. So if you still want to do the deal, that's some leverage with which you might negotiate something with the seller, depending on the seller's situation and motivation.
Yes it is contingent on financing, but I have the beginning of a good relationship with this listing agent that looks like it will prove to be more profitable than just this one deal, and besides I can still make money on it so.....I guess my initial anger provoked me to ask for advice here, and now that I am getting some feedback from you guys, I am starting to see other angles.
wow, that was a running sentence.
BTW Nancy, That is what I originally intended to do when I got the news. Is the credit card idea ok or should I just use the cash?
Scott
Or am I being told that I could still get the terms I was looking for, and I'm just not hearing it???
Scott
Scott,
Based on what other people have replied, it doesn't seem possible that the bank will change its guidelines to give you a 95% LTV loan. What I was thinking is that if the seller is motivated (along with everybody else) maybe you could get a price reduction, seller credit (guidelines permitting), lender break on their fees (?) -- everybody sort of chipping in to make the deal happen.
Nancy
Yeah,
That's pretty much what I thought was being told to me. I already know the bank won't budge, they said so. I suppose I could maybe ask the seller to carry back the other 15% or something. What do I have to lose. I do plan to close on time though.
Scott
IndyMac has a CLTV max of 80% meaning they do not allow subordinate financing on NOO stated. Even if the seller carries back (contractually anyway), the 15% you're back to a 95% deal that they will not do.
Here's a crazy idea - what about the seller gifting you the equity in the sales contract? See if the lender accepts that. Then you can make some arrangment outside of closing. Never done it; probably illegal, but hey we're just brainstorming, right?
Did you go to a broker or direct to the bank? The Bank rep can be sued for giving false info. Check with your attorney.
Quote:
On 2004-08-31 20:08, scott0049 wrote:
Or am I being told that I could still get the terms I was looking for, and I'm just not hearing it???
Scott
Yes, that is one of the things you are being told. You have two options along those lines, 1) go ahead and close with your credit card idea and refinance 2) ask for more time on the contract.
1) includes the option of waiting to refinance until after your rehab is done. Presumably the property will then be worth more and you could borrow more than 100% of your acquisition price.
ck,
That is what I looking at doing. You just confirmed it for me. I went ahead with the credit card and closed a little while ago. The ARV should be 65k so I know I can refi. if I want to pay closing costs twice.
Thanks everybody for the input. Its nice to know that people here have so many creative ideas to solve problems like this.
Scott