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Buying & Selling Real Estate
Account Closed
  • Contractor
  • Glenside, PA
3
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30
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Any recourse on bank reneging on a pre-approval?

Account Closed
  • Contractor
  • Glenside, PA
Posted Apr 16 2014, 13:29

I'm buying another duplex in PA. I was pre-approved for 5% down and $250,000 loan amount. The bank then said we could do 7.5% down in order to avoid mortgage insurance, which was great to hear. So I put it in an offer and it got accepted. So since the bank said we're good to go and our offer got accepted, I moved forward on the deal. I paid for inspections, an appraisal, and also put down $10,000 in deposits so far.

A couple weeks pass and the loan officer at the bank sent me a good faith estimate showing 15% down, instead of 7.5%, therefore requiring a larger down payment. I asked why this was, and they said it was just a clerical error. Ok, it happens.

I get a revised good faith estimate a few days later. Same 15% down. I ask why it STILL says 15% down. "It's just an estimate and nothing is set in stone; we'll get it figured out", they say. So I trust their word, and I don't worry.

We are now 2 weeks until closing, and underwriting won't budge. They want 15% down to make this deal work for them, or else no deal, even after I was already approved for 7.5%. And I don't have that extra 7.5% to put down. Luckily I'll be able to get my deposit monies back if the deal doesn't go through (since the AOS says 7.5% down), but not the ~$1300 I spent on the appraisal and inspections.

Somewhere down the line, I feel the loan officer and/or the underwriters at the bank made some sort of mistake. I know and understand fully that numbers from a good faith estimate can change, but only by a reasonable amount. Going from 92.5% LTV to 85% LTV is completely unreasonable.

Has anyone every been in a situation like this? Any recommendations? Do I have any recourse for getting that $1300 back if the deal doesn't go through? Sue the bank/loan officer?

Chris

P.S. I will be speaking with my lawyer about this to get his opinion, but I'd also like to see what opinions you all have.

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