Loan Contingency Removal Question
I am in the escrow of buying a condo as a first time buyer. The seller asked me to provide Lender's written Loan Approval and remove the loan contingency (actually all the contingencies) within 17 days after acceptance of the purchase contract and close in 30 days: 1. How guaranteed is the fund disbursement even after the lender provides the written loan approval by the 17th day? Is the lender bound by their written approval? If the fund doesn't get disbursed after I remove the loan contingency, do I lose my deposit to the seller? ( I would think so.) 2. On the purchase contract's Loan Contingency Removal section, there is an option of "the loan contingency shall remain in effect until the designated loans are funded. Shouldn't all loan contingency be like that? 3. I already signed the contract and did the home inspection. The 17th day is approaching and I still haven't heard back from the lender. I feel uncomfortable with this particular clause and want to negotiate it with the seller. What's the best way to handle it at this point or should I? (My agent is not of much help in my opinion) by tronql_718_487 from Salt Lake City, Utah. Sep 20th 2011
Jason Hall (JasonHall)
#25 ranked lender in Utah - 79 contributions
It definitely sounds like someone has dropped the ball in this process? What is going on with your real estate agent? This person should be going through all this with you and making sure you know everything regarding the contract. The pre-approval letter that is provided by you lender is not binding in any way and typically will clearly state that if anything should change it's null and void. I am here in Salt Lake and am more than happy to help answer any and all the questions you may have. Feel free to call anytime. 801-930-0301 Jason
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
Ok... lets answer all your questions.. 1) The written approval you have from your lender is not a guarantee of funds. Everything is subject to approval, so every piece of documentaiton you supplied your lender will be inspected, transcripts of your tax returns have been ordered, and in some cases a new credit report will be pulled... if anything changes or fall's outside of their guidelines, they will deniy your loan. 2) Loan contingency are a part of most contracts, and in some states there are some rights that you cannot waive even if sign a waiver... Have your agent or your Loan officer look into this... 3) Assuming you signed agreeing to the loan contingency waiver, your deposit is in jeopardy if you do not close on the loan. And yes, you can absolutely negotiate this back into the contract... WilliamAcres.com
David Webber (DavidWebber)
#57 ranked lender in Texas - 71 contributions
It sounds difficult but really is not. Whoever your lender is needs to step up and provide you with a writting approval with any conditions. In addition, a contract that has just 17 days to fund is not realistic, unless paying with cash. All though it can be done too many things can be overlooked and can cause delays when at the final underwriting stage. It usually takes about thirty days time to fund and close a solid approval loan. My guess is get an extension and put the pressure on your real estate agent/loan officer/seller's agent/escrow officer /home appraiser.
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