Mortgage Lender gave inaccurate info that affected our home purchase

[bk1978]

What is the name of your state (only U.S. law)? New York

We closed on a condo in June 2013 in an all cash deal that we were able to cobble together through family loans, liquidating investments, etc. Prior to the purchase we had received approval from our mortgage broker (in email but not in contract). We started the loan process in May. We reached out multiple times to our lender and they reassured us not to worry, that we were approved and it was just taking longer because of summer vacations.

Yesterday we once again reached out to our lender and they said everything was ok, and they were just waiting for one more approval from risk dept but it was standard and we were approved. Today we get a letter in the mail saying we were not approved because of inability to verify assets and that the loan type was inaccurate. All assets were verified, but when we called back again today they said it was a problem because we were taking a jumbo loan and wanted all cash back. This has never been brought up before as an issue. We wouldn't have purchased this condo and borrowed family cash if we did not have approval to return the monies. We are incurring penalties the longer we don't reimburse the investments. Do we have any recourse or legal standing?

PS. The condo was appraised at $925,000. We now own it outright. We asked for a $555,000 30-year fixed mortgage. We have a HHI of $200,000 plus approx $65K in mutual funds, $60K in 401K with excellent credit scores. The mortgage lender said that all of this was verified.

 

[tranquility]

They don't have to loan you money. Even in your facts you admit they told you additional approvals were necessary. I don't see any legal issue with what they did.

 

[Zigner]

You can sell the condo and repay the folks that loaned you money.

 

[LdiJ]

Or you could try another lender, and perhaps reduce the amount of your mortgage requirements a bit, if possible.

 

[bk1978]

They don't have to loan you money. Even in your facts you admit they told you additional approvals were necessary. I don't see any legal issue with what they did.

Yes, I understand they don't have to loan money. However, isn't there some type of conduct code were a mortgage broker cannot say we were approved when in fact we were not. It wasn't a pre-approval--but we have multiple emails where the broker says "Good news. You were approved for $555,000" and "Don't worry, you are approved. These things just take longer, especially during the summer months".

 

[Zigner]

Yes, I understand they don't have to loan money. However, isn't there some type of conduct code were a mortgage broker cannot say we were approved when in fact we were not. It wasn't a pre-approval--but we have multiple emails where the broker says "Good news. You were approved for $555,000" and "Don't worry, you are approved. These things just take longer, especially during the summer months".

You still need to meet their documentation requirements.

 

[bk1978]

You still need to meet their documentation requirements.

Yes. They said we had all of our documentation in a row. Today after talking to the broker, who did not know we were denied and was surprised to hear it, said it looked like the issue is that they normally don't do mortgage loans when it's an individual being paid back rather than another mortgage lender. However, this was the basis of the loan from the beginning and we were fully transparent from the get-go. It is even in the notes of all the documentation.

Is this just a case of the broker not knowing his facts? Does he have any type of obligation to know his companies practices and not give inaccurate info, or is that just a risk of doing business?

 

[tranquility]

Yes, I understand they don't have to loan money. However, isn't there some type of conduct code were a mortgage broker cannot say we were approved when in fact we were not. It wasn't a pre-approval--but we have multiple emails where the broker says "Good news. You were approved for $555,000" and "Don't worry, you are approved. These things just take longer, especially during the summer months".

Yet, there was at least one more "approval" needed before you were "approved".

Yesterday we once again reached out to our lender and they said everything was ok, and they were just waiting for one more approval from risk dept but it was standard and we were approved.

You don't have a true offer to make a loan to you until you get a Mortgage Commitment Letter. A written promise by the bank to make a loan at a rate for a specific property as long as conditions don't materially change.

You did not have that. You seemed to have a broker who kept assuring you the loan seemed good in order to keep you from finding another broker to get a loan through. Perhaps a loan officer at the bank said the same thing. But, until you get that signed letter promising an amount at a rate for a specific property, you have just people's opinions of what is happening.

You have no legal remedy.