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RealEstateAnswer
RealEstateAnswer, Lawyer
Category: Real Estate Law
Satisfied Customers: 28353
Experience:  10+ years in handling Leases, Landlord-Tenant, Foreclosures,Mortgages, and Eviction cases
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I moved to Dallas from New York City with my wife new job

Customer Question

Hi,
I moved to Dallas from New York City with my wife for a new job here. My wife and I went through a broker and found a house we like. I am a JPMorgan Private Client and the broker said she would underwrite our loan. We had 10 days grace period but after the 10 days we had to put down $50,000 in escrow to close on the house (it's new construction and not developed yet). This week I got a call from JPMorgan saying they can't finance our loan despite our good credit and assets. I reached out to several other banks but the rates and solutions jsut aren't feasible. I don't want to lose my $50,000 that's been sitting in escrow for a month. However, i was told that i will lose it if i can't close on the house. I don't know if i have nay legal options to protact the escrow investment since no damage was done and the house isn't even built yet. JPMorgan had 10days and were working with our agent and could have backed out much earlier on where there was virtually no cost. At this point there is a very high cost in backing out and i wanted to know my legal options.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  RealEstateAnswer replied 1 year ago.

Good afternoon. In the contract which you signed, was your ability to obtain financing a condition to buying the home? Did you sign anything with the builder that said the escrow of $50,000 was non-refutable? In addition, did JP Morgan advise as to why they could not finance the loan or any other lender ?

Customer: replied 1 year ago.
It is contingent on me receiving approval for third party financing. But the language reads that I have 14 days to obtain approval. If I don't terminate the contract in 14 days because of lack of approval (which jpm saw when I has the contract) it reads that the contract will no longer be subject to buyer obtaining buyers approval. Happy to send over the contract.
Expert:  RealEstateAnswer replied 1 year ago.

I do understand. Yes, it is not uncommon for a seller and a contract, to require you to be pre-arrproved, within a certain period of time. Often, buyers will obtain this prior to making an offer and entering into a contract, so they know if they can afford the home and/or obtain financing. In this case, if the contract which you signed did have a 14 day window, you would have needed to cancel it and back out, if you were not able to obtain it. Normally, it is not only being pre-qualified but also obtain funding, since it is not uncommon once a file goes to underwriting, that issues/problems are found. The broker really should have been on top of this and looking out for your best interest, since they knew it was time sensitive A get pre-approved for a loan should only take a few days and once you reach the end and did not have anything, should have cancelled the contract. I know this is not what you were hoping to hear but unless there were/are other contingencies in the contract, the seller could impose a claim. In this case, with the amount of money you stand to lose, you should retain legal counsel to represent you and go over the contract and see if you have defenses and something can be worked out to get at least a portion of the money back.

Customer: replied 1 year ago.
Than you. Chase sent me paper work of loan that made me think i was approved. We talked through the costs and it laid out the billing and closing costs. Now they back out and I'm still on the hook. i didn't know if they could legally do that? Or if the fact they viewed the contract, sent me terms and were in touch with the broker and sellers puts the responsibility on them to get me out of the contract?
Expert:  RealEstateAnswer replied 1 year ago.
Why did they back out? Also , are you sure the getting a loan commitment was not also something that was needed. It seems very odd that if financing was a condition and you could not get it that you can not get out if you were pre approved
Expert:  RealEstateAnswer replied 1 year ago.
Also why did you put down the money without any commitment
Customer: replied 1 year ago.
Can I send closing docs and jpm docs
Expert:  RealEstateAnswer replied 1 year ago.
I am not able
To review them immediately. You can share them and allow me time and I would be happy to respond to see what information I can shaee
Expert:  RealEstateAnswer replied 1 year ago.
share
Customer: replied 1 year ago.
Hi the document i'm trying to send is too large (5.2). Do you have an email i can send the contract with the $50,000?
Expert:  RealEstateAnswer replied 1 year ago.
There is evidence that you can not qualify for the loan as a result of the income issue. However, the issue is in regard to the time frame expiring to back out and you then proceeding to put 50,000 in escrow. Prior to that you needed to have the lender qualify you and if you did not and/or there was no financing contingency then you may lose the deposit
Expert:  RealEstateAnswer replied 1 year ago.

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