Can a loan be rescinded once closed?

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Once the loan is closed, the loan is closed. The lender screwed up, and THEY now have a big problem on THEIR end. It isn't your problem.

Unless they can prove loan fraud, then there is no recourse for the lender.. you have to comply with their requests for documents because you agreed to do it when you signed the "compliance agreement" which is included in all closing packages.. But it's obvious they made a mistake,,, and it's possible the lender wont be able to sell this loan.. so that's on them.. not you.. But short selling a home immediately after you close.. that's a completely different issue with numerous implications.. If your new lender finds out, it's possible they will try to link both the new purchase and the short sale together indicating that you might have done all this intentionally (loan fraud), by withholding material information so that you could close on the new home before letting the other home go back to the bank..This "buy and bail" strategy was very popular in 2008 and later during the mortgage crisis, but lenders put in guidelines to help identify these potential liabilities.. However, the guidelines have relaxed, and they are not looking for it like they used to.. but, had you told them upfront this was your plan, you would have been denied.. Even worse that you stated this in your original question, on the internet, for the world to see... that you "couldn't short sale until we got the new house".. This shows you knew that the lender would deny your loan had you short sold first and then applied. so you withheld that info so you could get approved.. Needless to say, you have put yourself in a very difficult position.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com NMLS# 226347 / RPM Mortgage NMLS 1541014 / AZMB0121893