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Ask Tina Your Own Question
Tina, Lawyer
Category: Real Estate Law
Satisfied Customers: 5436
Experience:  17 years of legal experience including real estate law.
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I am in escrow and have signed loan docs and so has the

Customer Question

Hi! I am in escrow and have signed loan docs and so has the seller. Appraisals and inspections have been done and even the wired amount has been sent to bank. We were supposed to close on the 29th but were waiting for an amended approval letter from sellers bank (because they had wrong information on an amount to be paid to second for payoff).An extension had been filed on march 9 to avoid any holdups but was never issued. Needless to say we were still waiting on that amended letter to close when we find out that Wells Fargo (sellers bank) sold loan to another investor and they want new terms. Is this legal?
Submitted: 6 months ago.
Category: Real Estate Law
Expert:  Loren replied 6 months ago.
Good day. I am Loren, a licensed attorney, and I look forward to assisting you.
Expert:  Loren replied 6 months ago.
Was a letter of commitment issued by the lender? How did they assign the loan before the loan funded and the borrower signed the note?
Customer: replied 6 months ago.
I have to look into this. I am pretty sure everything was in place. I have a copy of the escrow docs at home. This is approval letter that needed to be amended because 2nd lien was paid in bankruptcy judgment. On the day of signing the attorney for seller had said they spoke to bank who was sending amended approval letter over to close.
Expert:  Loren replied 6 months ago.
Thank you for the additional information. Any successor to the original lender would still be bound by the original terms of the commitment. They could not unilaterally change the terms or threaten to withdraw the loan to which the original lender committed.
Customer: replied 6 months ago.
what about the close of escrow that should of took place by 29th? I feel like the original lender held up the amended approval letter so that we could not close and then turns around and notifies that loan was sold and new investor says they want new terms?? Can they raise price of home now that appraisal is more than purchase price.
Customer: replied 6 months ago.
I have also wired my down payment to Wells Fargo because that's who my loan officer was working with at the time. What happens to appraisal and inspection I have already paid for as well.
Expert:  Loren replied 6 months ago.
No, based on the approval, they have accepted the terms of the sale contract and can not change that now. They may not raise the price after they have already agreed to accept the current terms.
Customer: replied 6 months ago.
But the "new" investor claims they want new terms. I don't know what that means. Is it legal to sell the loan while in escrow?
Expert:  Loren replied 6 months ago.
I have never heard of a loan sold while in escrow. They would still be bound by the obligations of the original lender, but they could make things so difficult to close that you would essentially be buying a lawsuit.
Customer: replied 6 months ago.
My agent is trying to find out when the loan was sold because we were not notified until Friday April 1, and it was not an April fools joke.
Expert:  Loren replied 6 months ago.
The problem is that you would have to sue the seller for breach. You would have to sue the sellers for breach and then they would have to sue the lender.
Customer: replied 6 months ago.
Can I send you the email my agent is sending the new investor and sellers attorney to see if they are in the wrong? She has put a timeline together to show they are at fault.
Expert:  Loren replied 6 months ago.
Sure. Upload it as a file attachment.
Expert:  Loren replied 6 months ago.
Do you have your own attorney representing you in the transaction?
Customer: replied 6 months ago.
No, I don't. This is a shortsale and the seller had an attorney going in. I don't know for what reason. All I know is I was suppose to close and get keys and none of that ever happened.
Expert:  Loren replied 6 months ago.
That is what your own attorney would have been for.In any event, you may have to sue the seller and then the seller can plead in the lender and successor.
Customer: replied 6 months ago.
Here is the timeline that was sent over.
Expert:  Loren replied 6 months ago.
Thank you for the timeline. Unless you signed an agreement with the lender, your contractual relationship is with the seller. You would need to sue the seller for breach if they are unable to deliver clear title in breach of the sale agreement. The seller would then have a claim against the lender and the investor for breaching the consent of the short sale and causing them to breach their contract with you.It is probably time to retain your own attorney if you want to ratchet up the intimidation factor to compel some forward motion in the transaction. The seller and lender are going to need to feel some heat in this.

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