HELOC stymie, "withdrawal / cancellation letter" not available
January 14, 2019 8:06 AM Subscribe
Stuck HELOC application following withdrawal or cancellation of mortgage, what to do?
In the summer I bought a house in Florida. At the start I applied for a mortgage with Bank A, a bank that operates in about 20 states in the East and Midwest. The bank durdled around for a couple months, and I finally abandoned the application and paid for the house in cash to get the transaction closed on time.
Later I went to Bank B, a national bank, to open a HELOC. The application stalled because Bank B wanted a “withdrawal/cancellation” letter from Bank A saying that the mortgage was not executed but was, well, withdrawn or cancelled. According to the loan processor at Bank A, they do not close paperwork with an applicant with any kind of letter like that, and they have been unable or unwilling to create one for me - frankly, Bank A has no incentive to do so.
What shall I do - including trying another bank - to get around this? I don’t know much about mortgages and financing.
In the summer I bought a house in Florida. At the start I applied for a mortgage with Bank A, a bank that operates in about 20 states in the East and Midwest. The bank durdled around for a couple months, and I finally abandoned the application and paid for the house in cash to get the transaction closed on time.
Later I went to Bank B, a national bank, to open a HELOC. The application stalled because Bank B wanted a “withdrawal/cancellation” letter from Bank A saying that the mortgage was not executed but was, well, withdrawn or cancelled. According to the loan processor at Bank A, they do not close paperwork with an applicant with any kind of letter like that, and they have been unable or unwilling to create one for me - frankly, Bank A has no incentive to do so.
What shall I do - including trying another bank - to get around this? I don’t know much about mortgages and financing.
Mortgages are recorded along with the deed in my state, so they should be able to check and see that you don't have a mortgage. Another option might be to provide evidence that you paid for the house out of pocket that should show that you don't have mortgage. For example, give them the closing statement and bank records that show corresponding withdrawal.
posted by unreasonable at 9:41 AM on January 14, 2019
posted by unreasonable at 9:41 AM on January 14, 2019
Whether you have a mortgage or not with Bank A is a matter of public record. Try showing them the records on the house. If they find that too informal you could pay for a professional title search.
posted by praemunire at 9:43 AM on January 14, 2019
posted by praemunire at 9:43 AM on January 14, 2019
Best answer: I am not sure if any of these will work, but some other ideas to try! We built a new home and started with one lender and switched to another. The first gave us a letter that was titled “Applicant Initiated Withdrawal.” Maybe try asking with those words.
Also, one of the reasons they care is that there may be a mortgage that is not yet showing up on your credit report and they want to ensure there isn’t debt there that isn’t being accounted for in their DTI calculations or that might effect the loan to value. Ask if you can do a letter of explanation and include correspondence from the other lender. We had oodles of inquiries from rate shopping and all we had to put in our LOE is that we were rate shopping and no new credit was obtained. Also, ask if there is a date at which they aren’t concerned - for example, if the other banks inquiry is more than six months old. Usually credit reports are only good for so long in the loan process and new debt would be reported within a few months. I feel like we had to write a LOE for any inquiry less than six months old, beyond that, they didn’t care.
When you closed, did you get a title search or insurance? Maybe a copy of those as well.
posted by polkadot at 4:59 PM on January 14, 2019
Also, one of the reasons they care is that there may be a mortgage that is not yet showing up on your credit report and they want to ensure there isn’t debt there that isn’t being accounted for in their DTI calculations or that might effect the loan to value. Ask if you can do a letter of explanation and include correspondence from the other lender. We had oodles of inquiries from rate shopping and all we had to put in our LOE is that we were rate shopping and no new credit was obtained. Also, ask if there is a date at which they aren’t concerned - for example, if the other banks inquiry is more than six months old. Usually credit reports are only good for so long in the loan process and new debt would be reported within a few months. I feel like we had to write a LOE for any inquiry less than six months old, beyond that, they didn’t care.
When you closed, did you get a title search or insurance? Maybe a copy of those as well.
posted by polkadot at 4:59 PM on January 14, 2019
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posted by JimN2TAW at 8:52 AM on January 14, 2019