Can Bank Back Off a Loan After It Was Closed
My question involves a mortgage in the state of: North Carolina.I recently closed (oct. 4th) on a refinance on my home under HARP 2.0 . All proper papers were signed and attorney was supposed to file them 3 business days later. Today (oct 10th) the bank called us and said that they made a mistake. The issue was that we were getting about $1200 dollars back and bank just informed us that under HARP we can only get about $200. Our regular mortgage payment is not considered late until 15th and were advised by bank to not pay it since the new loan would clear before that. Now we are told that new closing date is 18th so we got to pay this months payment . Since this was bank mistake and we already closed the loan, can bank do that ? Can they just say they made a mistake and that is that ? Aren't the papers we signed carrying any binding legal weight ? It was clearly the underwriters that stopped the loan from going through, but since bank is the one who made this mistake do we have any recourse against the bank? We had to jump through so many hoops , it took 6 months to get here, and all they can say is that they made a boo-boo. by aim199_385_766 from Durham, North Carolina. Oct 10th 2012
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
Everything you signed is "Subject to Lender Approval"... The lender obviously didn't approve, and they are correct.. Under FNMA Guidelines for HARP 2.0 refi's, you're not allowed to receive more than $250 cash back.. This should have been caught way before you ever signed loan doc's... but none the less this is where you're at... but, you have 2 options.. Don't sign, and cancel the deal.. Or sign and continue.. but that's pretty much it... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,848 contributions
More reasons NOT to get your loan from a bank. The fact this blatant error in rules wasn't discovered until well after closing is disturbing. The fact the bank took 6 months is disturbing. The fact the bank told you not to pay your loan when due is disturbing. Cancelling and re-closing will not effect you in any way if you still payoff your existing mortgage before the end of the month other than a late payment fee, which the bank should cover for you.
Travis Torcoletti (travis.torcoletti)
#0 ranked lender in South Carolina - 372 contributions
The loan is not closed until it funds and in this case it has not funded and they can do what they need to do to make the loan correct in their eyes. So, yes, they can do that...it sucks but it is true.
Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,249 contributions
Until the loan is "funded" by the lender it is not final, and apparently they missed this or the amount of funds you were receiving back wasn't known until it got to closing - which does happen occasionally. I had a similar situation a couple weeks ago. It isn't that it was a bank vs. a broker, the process and the guidelines are the same. Many banks are terribly backlogged and 6 months is not acceptable, but here you are ready to close and you can either go forward or start over with someone else. I often tell customers not to make the payment if we will be closing early in the month - it is due on the 1st and a penalty is charged if not paid by the 15th. The loan would not be reported as 30 days late unless they do not receive the pay off before the 30th. However, if the payment is not made by the 15th the late penalty will be included in the payoff amount. If you are dealing with a knowledgable mortgage officer they should be able to help work this out. Its a mess but could be worse. Good luck.
Thank you all for the answers. It seems that I got no choice and just redo it because I do not want to start the process from scratch with someone else. There should be a law protecting consumers from bank mistakes like this. What is the most disturbing thing is that on the day of closing we got call from the lawyer and they said that closing is delayed by few hours because they got to redo the papers because we are getting too much money back. So someone knew something was up but had not done nothing about it. Just appalling.
I want to thank you all again for very insightful info. We are refinancing with the same bank we already had a loan and they said they would pay the late fee. What the discrepancy is now that the loan pay off amount plus settlement charges are about 1200$ less than the new loan amount. I figured that they would just apply that $1200 to take off from the new loan amount, but they said they can't do that. So basically that $1200 is going to disappear (well about $1000, since we are getting about $250 back). We are still talking things out. Also I do not believe that loan was funded yet.
Linda Wintersteen (Linda123)
#63 ranked lender in Arizona - 1,256 contributions
what it looks like, is they added additonal payment to your payoff, and since they are closing before the end of the month they need to take it out ,, no you are not gettring screwed, who ever did your loan application took the extra payoff included , so you would not have to bring into closing... you are ok
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