Can I cancel my refinance while it's in underwriting?

[Ascorpia]

Sorry if this is a little long...

I purchased my house back in Sept 2014 with an FHA loan using a recommended lender. In hind sight, it was the most stressful time I have ever experienced. Lost documents, unreturned calls, closing was a month later than it was supposed to be due to his error and my lease was up. The loan did finally close though so I made peace and moved on. He called me in Feb after the MIP changes were announced and said I should do a streamline to lower my payment. My interest rate would stay the same, (4.25) but the payment would still be about $100.00 lower. Since he had done my original financing, I agreed and and he updated all his information over the phone and sent the electronic documents over indicating a possible closing date of 4/6/15. That was the last I heard and I didn't push it because frankly, I had no fear of being homeless since this was just a refinance.

Fast forward to this week....I get am email from his loan processor requesting documentation to meet the underwriters 9 conditions. I have no interest or intention on meeting these conditions as this was supposed to be a streamlined refi with minimal document requirements. I sent an email to the lender asking why were these being requested and his response was "I don't know but we are ready to close once these are recieved." These included a VOR from my previous landlord, questions regarding a divorce and child support from 8 years ago, LOE for a foreclosure, etc. 

I decided to call another lender to see if this was normal. He offered me a lower interest rate and said that he did not understand why I would be offered 4.25 on a FHA loan. With him, my payment would be reduced by almost $260.00. He also said the only documents I needed to provide are a copy of my drivers license, ss card, mortgage note, latest statement and hazard insurance information.

So my question is, can I walk away from my original lender without consequences? I kind of feel like I am getting shafted at this point am just fed up.

Thank you for any insight!

[StartingOver10]

Yes you can cancel.

I suggest you do it in writing.

Hopefully he didn't slip in a broker agreement into the paperwork you signed electronically. Go with the better lender. $260/month over 30 years is huge - over $93,000.

There should be no consequences to cancelling unless you signed some sort of broker agreement with your current lender.

[ezdriver]

Dump that lender and move on. 

[frugalQ]

i agree that you should dump that lender and move to another one.

However, keep in mind that a streamline FHA refi does not necessarily mean less info....it's still a full document loan.  The difference is that you don't need a appraiser.  Whe we did a streamlined refi on our house back in 2012, we still had to provide check stubbs, tax info, etc.

[Ascorpia]

Ok thanks, I just wanted to make sure that I wasn't legally obligated to anything. I know there is a right to rescind after closing but I certainly don't want to get to that point. I also just looked through the e-docs and don't see anything about a broker agreement.

[Ascorpia]

I understand that there may be documents required but it seemed a little crazy to me that I should have to track down my old landlord to get proof of rental payments...or to explain why my 2 year old has the same first name as my ex-husband.

[frugalQ]

i can understand the VOR condition.  He is probably asking because he can't verify 12 months of mortgage payments....and he can't go back to your original purchase documents for the VOR because the verification needs to be dated within the current process timeline.

now, i have no words for why he needs info on your child's name.