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  1. #1
    Join Date
    Jun 2012

    Default Bank Agreed to Credit Closing Costs, then Didn't at Closing

    My question involves real estate located in the State of: California

    Hello, I hope someone here can help me. We recently bought a property in California, it was a short sale through a bank in Wisconsin. The bank agreed to credit us 2% of purchase price towards closings costs. When we started this process, we applied for a loan through a mortgage broker that our agent recommended, she was supposed to be "the best". This sale was in the works for several months, so there was plenty of time to do the loan paperwork in order to close on June 22. On May 1, she sent out a preapproval letter, over 7 weeks before the closing date. We supplied everything that the broker asked for promptly to get the loan and answered every question. I kept asking her if she had everything she needed and when she bothered to answer, which was not often, she said everything was fine.

    About a week before closing she calls and tells me that she can still get the loan for us, but not by the closing date. We ask about an extension but are told that it is not an option as it has already been extended serveral times. There was no time to start another loan before the closing date, so we had to liquidate everything we own to scrape together money to buy the property with cash and wire it to title. So come closing day at 4:00pm on a Friday. we are told that the bank is refusing to give us the 2% towards closing costs because we did not take out a loan! To my knowledge, it did not say anywhere that the credit would only be given towards closing costs for a loan, it simply said it was towards "closing costs". We had to pay plenty of closing costs when paying cash, above what the 2% would have been. But the bank flat out refused. Then we asked if we could take out a private "hard money" loan, would we then get the credit? Monday came with no response from the bank, then Tuesday. On Tuesday late in the afternoon we got word that if we don't wire the remaining 2% by 10 am the next morning, they would cancel the contract. They didn't bother to answer if we could do it with a "hard money" loan. So we had to pay it.

    Is what they did legal? The 2% credit is written and agreed to in a "short sale approval" letter from the bank. and its on the HUD. How can they deny giving it to us because we didn't get a loan? We still had plenty of closing costs. Can we take them to small claims court? What about the mortgage broker - she is the one who got us into this mess, if she had not dropped the ball, we would have gotten a loan, would still have assests that we didn't have to liquidate, and would have had the 2% credit. Can we take her to small claims? Help please! Thank you.

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Bank Agreed to Credit Closing Costs, then Didn't at Closing

    Quote Quoting is97
    View Post
    To my knowledge, it did not say anywhere that the credit would only be given towards closing costs for a loan, it simply said it was towards "closing costs".
    I can't read "it" - presumably a written commitment from the bank - from where I'm sitting, and "To my knowledge" is not the same thing as, "I read the agreement and there is no such exception". Find out the terms of the actual agreement, then share them here.

  3. #3
    Join Date
    Jun 2012

    Default Re: Bank Agreed to Credit Closing Costs, then Didn't at Closing

    I apologize for being vague. "It" is a short sale approval letter issued by the bank, in which it refers to the credit in two places, once in the letter, and again in the HUD, both are below. The only way I see that there can be an exception is that in the HUD it says that its "Paid on Behalf of Borrower" as a footnot, and we are not really borrowing, as far as the bank is concerned.

    Sale approval details
    This approval is based on the purchase contract dated 01/24/2012 between XXX, the seller(s),
    and XXX and, the buyer(s), for a purchase price of $360,000.00 and if in
    a HAFA closing an executed Request for Approval of Short Sale. The terms of America's Servicing
    Company approval and instructions to the Settlement Agent are as follows:
    1. The required payoff for the referenced loan is $316,481.72, scheduled for settlement on or before
    06/22/2012. Your payment and settlement costs for this transaction are:
    Mortgagor payment:
    Cash at Closing: $0.00
    Promissory Note: $0.00
    Approved Seller Closing Costs:
    Real Estate Commission: $21,600.00
    County Taxes $-608.72
    2nd Lien Payoff $11,432.00
    Seller Credit to Clo $7,200.00
    City/County Tax/Stam $3,096.00
    NHD $129.00
    Refuse Liens Payoff $670.00
    Approved seller concession to buyer's closing costs: $0.00
    Itemization of concession:
    Excess funds, if any, must be paid to America's Servicing Company
    __________________________________________________ __________
    500. Reductions In Amount Due to Seller
    501. Excess deposit (see instructions)
    502. Settlement charges to seller (line 1400) 25,495.00
    503. Existing loan(s) taken subject
    504. Payoff of first mortgage loan to ASC 316,481.72
    505. Payoff of second mortgage loan to Wells Fargo Bank 11,432.00
    506. **Seller Credit Towards Closing Costs 7,200.00
    507. 2011-12 1st Installment POC $3,637.41
    508. 2011-12 2nd Installment POC-S $3,637.41
    ** Paid on Behalf of Borrower

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