Maltese_IHB
New member
I need some group advice as we are in a pickle. The story will be told in generalities in case the counterparty is an IHBer.
We entered contract to purchase a home in Coastal Orange County with a purchase price in the range of 1-1.5 million dollars. There was to be a 30 day escrow. We were approved for a 30-year fixed mortgage through a very large bank. The approval included an exception to the bank's usual rule of 2 years self-employment. The mortgage became several days late for closing, due the bank asking for last-minute information. Just prior to loan documents being released an underwriter who had previously approved the loan became nervous and bumped the loan up to a "higher" underwriter, who sat on the loan several days and then denied the 2-year self-employment exception. The loan was denied. We have a large sum of money (3% deposit) in escrow and the seller is asking us to pay a late penalty per day. There are alternative adjustable rate loans 5:1 or 7:1 with interest rates in the 5.75 and 6.1% respectively, 80% loan to value. These unfortunately are worse than the rate we were seeing on 30 year fixed. Weare left with the choice of potentially losing our large deposit and legal fees, or going through with a purchase on a loan that we are not comfortable with (mostly due to risk of interest rate increase, home values continuing to fall, etc). The loan can close in 7-10 days, so we may be on the hook for several thousand dollars of per diem fees to the seller.
What would you do? Walk and try to settle for some of the deposit, or buy and not lose the deposit? Would you go after the large bank to cover the penalties that you incurred due to the error of their underwriter?
Thanks for your input.
We entered contract to purchase a home in Coastal Orange County with a purchase price in the range of 1-1.5 million dollars. There was to be a 30 day escrow. We were approved for a 30-year fixed mortgage through a very large bank. The approval included an exception to the bank's usual rule of 2 years self-employment. The mortgage became several days late for closing, due the bank asking for last-minute information. Just prior to loan documents being released an underwriter who had previously approved the loan became nervous and bumped the loan up to a "higher" underwriter, who sat on the loan several days and then denied the 2-year self-employment exception. The loan was denied. We have a large sum of money (3% deposit) in escrow and the seller is asking us to pay a late penalty per day. There are alternative adjustable rate loans 5:1 or 7:1 with interest rates in the 5.75 and 6.1% respectively, 80% loan to value. These unfortunately are worse than the rate we were seeing on 30 year fixed. Weare left with the choice of potentially losing our large deposit and legal fees, or going through with a purchase on a loan that we are not comfortable with (mostly due to risk of interest rate increase, home values continuing to fall, etc). The loan can close in 7-10 days, so we may be on the hook for several thousand dollars of per diem fees to the seller.
What would you do? Walk and try to settle for some of the deposit, or buy and not lose the deposit? Would you go after the large bank to cover the penalties that you incurred due to the error of their underwriter?
Thanks for your input.