Posted by Jim/AL on 8/7/09 8:13am
Msg #299111

3 day RTC question

I know the criteria for the borrowers 3 day recession rights, but my question is does the lender also have any rights to rescind the offer to loan still during this period?

I know I have seen the re-verification type doc in many closing packages....where they may verify employment and or income etc... during this period so I assumed the lender could rescind also and we all know what assuming can do for you. I figured if they found out you just got layed off from your only income stream thay would say "sorry, but no can do". Am I correct?

Had this happen to me 17 years ago, but it was before the closing took place.

Reply by MW/VA on 8/7/09 8:17am
Msg #299113

I could be wrong on this, but I think a lender has a right not to fund a loan for any reason--3 day RTC or not.

Reply by PAW on 8/7/09 8:27am
Msg #299117

You are correct, but ...

The lender is obligated by the "Loan Commitment" if there is one. For example, the following is from a typical commitment letter:

CANCELLATION OF COMMITMENT
Lender reserves the right, in its sole discretion, to cancel this Commitment for any of the following reasons:
(a) any material facts appear that you have not previously disclosed to Lender;
(b) your failure to comply with or satisfy any of the requirements of this Commitment;
(c) an examination of title to the Property reveals unmarketable, defective or unacceptable title.
(d) there is any adverse change in your credit, income, assets, liabilities and/or employment:
(e) any representation made in your loan application is incorrect or any statement which you have made to Lender in your application or otherwise is found to be false in any material way:
(f) if the loan is for the purchase of the Property, there is any amendment or modification of the contract or agreement of sale between you and the seller without prior notice to and approval by Lender.
(g) there is any change in the condition, valuation or character of the Property after the time of the appraisal;
(h) there is any change in whom the borrower(s) is (are);
(i) Lender is prohibited by any law or regulation from doing business with your for any reason;
(j) there is any change in the secondary mortgage market or loan sale requirements prior to loan closing that would make the Loan Product ineligible for sale; or
(k) in the event you have not locked-in an interest rate, your established interest rate exceeds 5.750% and you are unable to qualify for the loan at the time of loan closing under the underwriting guidelines of Lender in effect at that time.

Reply by Jim/AL on 8/7/09 8:28am
Msg #299118

That is what I thought also, but just had two elderly borrowers (2 1/2 hour closing from he$$ only 80 pages) call me last night and tell me that lender told them this is not true and I found that strange. Not my position to argue with BO or LO, but I would really like to know the legal answer.

Reply by PAW on 8/7/09 8:34am
Msg #299122

Depends on the lender's commitment and promises.

Hopefully provided in writing.

Reply by CopperheadVA on 8/7/09 8:27am
Msg #299116

Yes, I had this happen on a loan I signed earlier this year. I was called by the TC for the re-sign about a week after the initial appointment - they told me that the lender had rescinded the loan during the RTC because it discovered that the B had changed jobs without disclosing it to the lender.

Unfortunately, I was not able to accept the re-sign and I did not get paid for that signing.

Reply by Jim/AL on 8/7/09 8:33am
Msg #299121

Thanks all for your responses, feel better about it now.

I told them to check with the LO, but that I thought prior to funding (actual closing) the lender had the option also. Stepped in deeper than I should have with that comment I know, beat myself up all the way home.

Reply by MW/VA on 8/7/09 8:36am
Msg #299123

Re: Thanks all for your responses, feel better about it now.

Things happen. What about all the TBW loans that aren't going to fund? No way I would try to explain that to a borrower, and I'm surprised that some haven't called me.