Loan conditions drastically changed, how to mitigate?

June 15, 2015 5:10 PM

I'm very close to closing on my first home. I went with Chase when I shopped around as I like the service the banker provided. Today the banker told me the I don't qualify for a conventional loan and only for some kind of in-house loan where Chase is solely responsible for the risk. This increases my closing costs anywhere from $3000-5000. Is this normal and is there anything I can do about it?

Basic Information about property/deal Condo: 200k Down payment: 20%. Credit score: 750+. Private client status with the bank.

I'm told the reason I don't qualify for a conventional loan is that the HOA master insurance policy does not cover law and ordinance service.

We're now at 6 days past the original closing date and it is too late to switch lenders. Is this normal on the part of the bank and is there anything I can do now?

posted by iamisaid to Work & Money (13 answers total)

Do you have a lawyer you are working with? This seems like something like to run by them - it sounds really wonky to me, particularly if you had pre-approval.
posted by Toddles at 5:38 PM on June 15, 2015 [4 favorites]

you should talk to a lawyer, but this sounds shady. like the old 'spot delivery' car scam.
posted by mu at 6:16 PM on June 15, 2015 [1 favorite]

it sounds like a bait-and-switch. Talk to a lawyer before doing anything. With that credit score and that much down, there's no reason you shouldn't qualify for a conventional loan. What's also very fishy is pulling out an HOA insurance clause (something that should have surfaced much, much earlier in the process) as a reason to jack you into worse loan terms. They're counting on you feeling like it's too late to do anything about it.

Seriously, the "oops, a minor technicality at the 11th hour means another $5k from you" is a common real estate scam. Your only leverage is walking away, and if you do, you'll likely find that last minutes issues aren't really issues at all.
posted by fatbird at 6:17 PM on June 15, 2015 [15 favorites]

Threaten to walk out on the deal if financing isn't restored to the as-agreed terms. And make sure everyone involved knows about this...seller, realtors, etc. and make sure they know Chase is responsible for the deal falling apart. I have a feeling things will clear-up quickly.
posted by Thorzdad at 6:21 PM on June 15, 2015 [5 favorites]

In my limited experience of buying a house and then selling it, these sorts of last-minute emergencies can often be solved by getting all the parties on the phone and forcing them to work it out, since they usually seem to be incapable of talking to each other, especially loan underwriters. If you have a buyer's agent, this is something they usually help with.
posted by muddgirl at 6:48 PM on June 15, 2015 [1 favorite]

The loan officer hates it as much as you do. Overlays suck. But then there's always this: https://www.fanniemae.com/content/guide/servicing/b/2/03.html (do ctrl+f for law and ordinance.)
posted by brownrd at 7:31 PM on June 15, 2015

Walk away. Chase is a horrible mortgage lender and servicer. They bought my original mortgage and proceeded to charge me a "late fee" for paying a few days early, and then changed the address for the mortgage payment, buried the notice on the third page of the statement, and then reported it as a failure to pay when they sent the (auto-pay) check back to my bank. I couldn't refinance fast enough to get away from Chase. Get a loan from a credit union; your credit is good enough.
posted by caryatid at 8:30 PM on June 15, 2015 [8 favorites]

Regardless of what you do with Chase, I would contact at least one mortgage broker tomorrow, explain that you might need a loan very quickly, and explain the situation with the law and ordinance service. Their reaction might give you some insight into whether this is a real obstacle or not, and you should get the ball rolling on a backup source of funding. Unless you're near-certain that you'll have to pay these extra closing costs whoever your lender is, I would absolutely tell Chase that you're walking unless this is resolved. Seeking new funding will not make the seller happy, but unless they have someone else chomping at the bit to buy the place, I don't see what choice they have but to push back the closing while you get a loan from a new place.
posted by deadweightloss at 8:46 PM on June 15, 2015 [7 favorites]

I agree with caryatid, above. Chase is the worst, the scammiest, the most evil of all the banks. I had a credit card with them and they kept crediting my payments to the wrong account, and then hitting me with late charges. My best advice to you would be to run like hell to a different mortgage lender.
posted by MexicanYenta at 12:48 AM on June 16, 2015

Nthing caryatid and MexicanYenta. My mortgage situation with Chase was a total disaster.

I think you might be able to switch lenders even at this late date. The mortgage companies can turn it around pretty quickly if they know they have to.
posted by getawaysticks at 7:16 AM on June 16, 2015

A $5000 fee is huge; that's like 3% of the loan amount. It could be an outright scam, or a simple mistake from the person at Chase, or actually true. Whatever the case Chase has it in their power to make it right. They can waive or eat that fee and still issue the special loan to you. They particularly have flexibility if it's an in-house loan.
posted by Nelson at 7:59 AM on June 16, 2015

You may also be able to get your appraisal (assuming it was done by a third party appraiser ) reassigned to another lender. (In my experience the turn time for the appraisal is often what dictates how long it takes to get a mortgage approved.) If you've paid for it they should give you a copy.
posted by skycrashesdown at 8:11 AM on June 16, 2015

Definitely try for a different lender, especially a mortgage company. You may think it's too late, but mortgage specialists might be able to do this for you anyway. Do you have a real estate agent? Which lenders do they recommend? You can even use the "mortgage brokers" category on Yelp to find someone better. Get on the phone with them first for faster service.
posted by purple_bird at 1:19 PM on June 16, 2015