topic Re: Keeping deposit on mortgage AFTER changing rules? in Credit in the News

Keeping deposit on mortgage AFTER changing rules?

Anonymous — Tue, 30 Sep 2008 14:29:24 GMT

I read that the housing crunch has hit NYC (where I live) but the terms seem weird to me;

Lenders are now requiring 20% down vs 5%.

But the thing is borrowers who were formerly approved and put the 5% down (in NYC this means $50k for a 500 sq ft studio) are now being told they need to put another $150k down. However many people don't have this so not only can't finalize the mortgage their deposit is forfeit. Now how can THAT be legal???

Re: Keeping deposit on mortgage AFTER changing rules?

Anonymous — Tue, 30 Sep 2008 14:32:25 GMT

You would think the Earnest $'s would need to be returned-

Re: Keeping deposit on mortgage AFTER changing rules?

MattH — Tue, 30 Sep 2008 18:59:22 GMT

@Anonymous wrote:
I read that the housing crunch has hit NYC (where I live) but the terms seem weird to me;

Lenders are now requiring 20% down vs 5%.

But the thing is borrowers who were formerly approved and put the 5% down (in NYC this means $50k for a 500 sq ft studio) are now being told they need to put another $150k down. However many people don't have this so not only can't finalize the mortgage their deposit is forfeit. Now how can THAT be legal???

If the buyer's agent and/or lawyer was doing his/her job correctly, the offer would have included standard contingency clauses -- when my wife and I bought our condo, the deposit was held in escrow until closing day in case of various contingencies. Had our loan not been funded, had the seller been unable to pass clear title, had the inspection turned up major problems, etc., the deal would have fallen through and we'd have got our escrowed deposit back. There were a few fairly minor surprises that turned up shortly before closing (stuff like a special assessment from the Owners' Association) on which our lawyer and the seller's lawyer ended up splitting the difference. I gather that sort of thing is commonplace.

Re: Keeping deposit on mortgage AFTER changing rules?

Anonymous — Wed, 01 Oct 2008 00:57:27 GMT

There will probably be some legal action taken on this issue. My loan was delayed a couple of days, because I didn't foresee the calamity that occured the week my mortgage was scheduled to close. Some of those people may be glad they didn't get the loan in a few months. This is no time to be house poor.