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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Legal
Satisfied Customers: 110442
Experience:  JA Mentor -Attorney Labor/employment, corporate, sports law, admiralty/maritime and civil rights law
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I was in the process of getting approved for a house. Part

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I was in the process of getting approved for a house. Part of the preapproval was providing 12 cancelled checks of rent for the last year. I advised my loan officer in email that I could only provide 4 months, but my girlfriend who is on the lease with me can provide the rest. He told me that would be fine. Once I provided him all the documentation I had the Appraisal done, Home Inspection completed, mortgage application was processed, and I provided my first and second deposit for a total sum of $5000. I was then rejected for the loan for not having 12 months of cancelled checks "in my name only". I was the only being on the house. So they "Prudential" provided the loan denial letter to the sellers realestate agent, but when they did that they put the denial loan amount higher than what the contract states. So now the sellers are not releasing my deposit. Part of the preapproval stage I should have been rejected right from the beginning because I didnt have sufficient renter history. Also with them providing the wrong document to the sellers. I have everything in email including the loan officer stating that if I receive my girlfriends cancelled checks that would fine. I am asking if I have enough to sue Prudential. Both the realestate agent and loan officer are Prudential employees. I feel I was lied too and should never have been able to make an offer on that house.
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

Unfortunately, the loan brokers and the underwriters often seem to differ on what is acceptable and what is not acceptable. I just finished a case with a client where they told the client they needed paychecks and proof of employment. The broker told the client that any checks from the employer were sufficient, since it was a new job and they were relocating to take the job which was the reason for buying the house. The client presented copies of the signing bonus check and the payment for moving expenses. The broker claimed it was sufficient, the underwriters argued that it was not sufficient and refused the loan. We spent over a month arguing with the underwriters and supervisors to get the loan approved.

I mention this to you to illustrate that the broker may honestly believe something is sufficient and depending on what underwriter takes the documents each underwriter may insist on different things. In your case, you could fight the underwriter and seek the approval.

However, if you are rejected and cannot get the underwriter to approve the loan, if your contract had a mortgage contingency clause, then the seller should indeed be releasing your deposit on proof you did everything you were supposed to do to try to obtain the mortgage. The denial letter should also accurately reflect the amount you were rejected for and if they put a higher amount it is up to you to now get them to correct that letter. However, if you were denied your loan despite you making good faith efforts to obtain the loan, then your seller is legally obligated to return the escrow if you had a mortgage contingency clause.

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