Need your advice

odyssey77 · Joined: 07 Sep 2006 Posts: 1

Hello there,
I need some real estate advice. I have been trying in the last month to get a mortgage for a Condo that used to be 2 different units but now is one.
My loan officer told me all along that all was fine with the loan, even until 3 days before she was supoposed to put in a loan commitment. Then she never put in a loan commitment which was supposed to be done by August 14.. 5 days before closing (August 18) she informs us that she is having problems getting the loan. She sid the only problem as to do with the title of the property. That was clearly out of our control. We tried to get an extension but the sellers would not grant an extension and the closing date went past..
The loan officer was still trying to get a loan from us after the closing date. But we informed her that we could not go on looking for a loan when our request for an extension from the seller had not been granted. It would be a waste of time. Then on August 28th We requested for a return of earnest money, but the sellers refused instead giving us a 2 day extension then. We could not do anything, especially as we discovered our loan officer had been lying to us, our attorney, and realtor about so many things. We are thinking of suing the loan officer and her company for the errors they made that led to the loss of our money. This way, we can get our money back. Please advice me from your experience in this industry.

m2c · Joined: 03 Aug 2005 Posts: 937

Usually there is little hassle getting earnest money returned but the seller is likely looking at the earnest money as liquidated damages. Was there a “contingency clause” in your sales agreement? This clause would effectively kill the deal if you were not able to obtain financing but there’s still leave the issue of getting a check. Typically the real estate broker holds the earnest money but they want releases from both parties before coughing up the money. Real estate brokers do NOT like situations such as yours and you might try applying pressure there to gain an “ally”. Failure to return earnest money in an expeditious manner is VERY rare.

A suit may not be cost effective but would make you feel better. Win the battle; lose the war! I saw a less costly approach used in a similar situation. Borrower recorded a “notice of interest” against the property. Sorry I don’t remember the exact details and this was likely done under state law but it put a sufficient cloud on the title that the seller could not resell the property since title insurance could not be issued to new buyer. Boy, was the seller cooperative after that. Check with a title company or your attorney to see if this approach can be taken in your state.