Anyone Else Noticing Lenders Backing Out More Often Lately?

[Deborah Wodell]

Recently, I’ve been seeing more and more posts from investors saying their lenders backed out—sometimes just days before closing. It’s happening more often nowadays, especially with fix & flips and other investment deals.

It’s tough to watch good deals fall apart after all the work that goes into finding and locking them up.

Have you had a deal fall through because the funding didn’t come through in time?

• What did you do?

• Do you have backup lenders lined up, or a plan B?

• Have you shifted toward DSCR, creative financing, or private money to avoid the risk?

Would love to hear how you’ve been handling this lately—your insight could help a lot of people here!

[Don Konipol]

Quote from @Deborah Wodell:

Recently, I’ve been seeing more and more posts from investors saying their lenders backed out—sometimes just days before closing. It’s happening more often nowadays, especially with fix & flips and other investment deals.

It’s tough to watch good deals fall apart after all the work that goes into finding and locking them up.

Have you had a deal fall through because the funding didn’t come through in time?

• What did you do?

• Do you have backup lenders lined up, or a plan B?

• Have you shifted toward DSCR, creative financing, or private money to avoid the risk?

Would love to hear how you’ve been handling this lately—your insight could help a lot of people here!

Yes, we are hearing that a lot and receiving lending requests where the lender killed the deal “at closing”. 
We actually backed out of two deals recently when we found out that the borrower lied or fabricated information. In one he checked the box on the application that said he or no entity he was involved with had ever file for bankruptcy. When our attorney ran a final check before closing we found out that he was IN bankruptcy.  
The second deal was a little less straight forward.  The borrower showed us a tax return for 2023 that showed he had paid $2,050,000 for the subject property as this was the acquisition cost listed in the modified balance sheet as part of the corporate tax return.  Since the loan balance was $595,000 we asked the borrower to confirm that he had paid $1,405,000 down when he purchased the property. He confirmed such in an email to me.  However, as part of the final checklist we use, we asked for copy of closing documents when he purchased the property. Turns out he didn’t pay $2,050,000 - in fact he had no money in because he paid only $595,000 - with a “nebulous” promise and u recorded deed transfer back to the seller if he couldn’t cash out for more money.  

I guess these borrowers have no problem committing fraud, and probably went to the next lender with a story about how I “left them at the table”.