My financing fell thru, after initial closing date. Do I get EMD?

Question

So my lender was lagging a lot and therefore me and the sellers agreed to postpone closing date twice (we signed anAddendum). Now the official close is set for next week. This is about 50 days after signing the initial contract.

My lender just told me the underwriter said I didn't have a good enough DTI ratio so the loan was denied (I'm self employed. Property is in Missouri).

I’m scrambling to find another lender. However, in case I need to pull out, the sellers broker is saying that I might be in violation of the Loan Commitment Deadline and therefore would forfeit the EMD.

I’ve attached the parts of the initial contract here. It’s a bit confusing to me, and would love your guys take if what the broker is saying is accurate or possibly just a scare tactic.

Thank you!

Neel P. · Answer

Got it! Thank you for the feedback. I'll keep in mind that they may ask for a non-refundable EMD and prep for that...didn't know thats a thing.

Wayne Brooks · Answer

@Neel P. The seller wants a larger EM, and I’ll bet it will non refundable, because you’ve had multiple extensions and the seller is tired of dealing with it...if I were their agent I would ask for the same thing, or simply put the property back on the market.

Neel P. · Answer

Hey Bryan,

Quick update:

• Good news - I got a new lender in place, pre-approved and in-progress, and got the Appraisal transferred over successfullyBad news - the seller wants a new contract and to increase the EMD amount. I'm not sure why or what the angle is.

I want to close on the unit. Should I put more money in for EMD? If so, I would want a provision that says if I get denied a loan, then I get the entire EMD back. However, I don't know if "new contract" means the seller wants to take the existing EMD and have a new contract for a new EMD amount...if so, is that normal?

Thank you!

Bryan Balducki · Answer

@Neel P. of course and that is definitely a good idea! Hope all goes well!

Neel P. · Answer

Thanks for the insight Bryan! I'll likely need to extend the close date again due to financing, which I think the sellers will agree too. I should probably then also add the Loan Termination Deadline extension during the same amendment next time and see if they agree to it.

Bryan Balducki · Answer

@Neel P. hard for me to see the contract you posted, but I believe the seller’s broker is correct if you are past the loan termination deadline, which is usually close to the closing date. If you kept extending the closing date along with the loan termination deadline, then you could be in the clear, but that deadline is the last chance to get your earnest money back. I would check the most recent amend extend contract to see if the loan term deadline was also changed to the new closing date. Hope this helps!