Settlement issues/Gift $$

[karlson]

I have an unusual situtation. My husband and I put a contract on a new townhome in WV in October. We entered into the contract with bare minimum down and was going to get a gift letter from a family member for settlement. At this point, we are ready for settlement. The loan was approved although it stipulates we must have the settlement money in the form of a gift letter only; basically we could not borrow the money as a personal loan. Well the family member cannot give us the money because circumstances that have come about medically. The builder has taken to threating us to buy the house but we have no idea where we could get the money. Can they really do this? They are speaking of good faith understandings but we never signed nor do they actually have a letter stating any person will give us this money.

Any input would be much appreciated!

 

[HomeGuru]

Well, it is obvious that you can not buy the property. Was the purchase of the property subject to financing and the gift downpayment? If so, walk.

 

[karlson]

Well that's what is interesting. Of course the contract was based on obtaining financing but nothing is stated about "gift money"; only to pay all pre-pays,etc. at settlement. The financing company did not require us to provide proof that someone was to give us anything which I guess was kind of crazy but I am sure they were not expecting any problems because we certainly were not.

[Edited by karlson on 11-27-2000 at 10:32 PM]

 

[HomeGuru]

The lender normally requires a gift letter and a purchase contract ususally contains a clause contingency or not on obtaining cash funds for the downpayment. In your case there would be a contingency on obtaining cash funds because you do not have the cash sitting in your account.

 

[David J. Miller]

Do you have a copy of the approval letter from the lender? Often times there are two such letters. One from the loan officer and the other directly from the underwriter, signed by the underwriter or processor. Usually the loan officer will generate a one page approval letter rather than supplying the mutiple page commitment letter. Did the loan officer leave off the requirement for the gift?

I would contact the loan officer and discuss with him/her the approval conditions. I cannot think of a minimum down payment loan that does not require verification of assets needed at closing. Ask the loan officer if in light of the fact that you are not getting a gift as you once thought, and since you do not have the funds elsewhere are you still eligible for financing. If the loan officer says no, you have not satisifed the financing contingency which means you ought to be able to walk.

I am not an attorney.