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Lost Financing for a Home Purchase and Now the Seller Wants to Sue

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Anonymous
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Lost Financing for a Home Purchase and Now the Seller Wants to Sue

I placed an offer on a home back in June and just found out a week ago that I lost financing.  The problem is that my lender, back in early July/end of June said that my debt-to-income was too high because of my financial aid.  She told me that I would need to get a deferrement, but I couldn't because I already had one until Sept. and you are only granted one a year.  So we discussed me getting an IBR (income based repayment) set up and it would then override my deferrment.  This was the only way that the loan prcoess could proceed.  I did this, like she requested, and thought things were fine.  I was then contacted by a credit agency that the lending bank uses.  She needed my permission to speak 3-way with me and my financial aid institute about my IRB time-frame.  Come to find out, when I applied for the IBR in July, it threw off what the underwriting needs to process the loan....they need it to include the month that your payment begins (which was Aug.) and last for a full year.  Problem is, my IBR began in July 2012 ans woulld go through July 2013 and they only allow you to apply once ayear so there was no changing it once it was started.  It should have been something that our lender caught before ever giving a preapproval letter, but she didn't.....infact, didn't until the credit agency saw it a week ago.  Now our (unhelpful) realtor sent me an email tonight stating that the seller plans to proceed to closing tomorrow and if I'm not there, he plans to sue for liquidated damages.  He said that he feels that I did not use a good faith effort to obtain the loan.  Another thing is, I only had ONE choice of lenders because my credit score was only 605 and I was turned down by all banks but this one.  So, it's not like I can just start over with a different bank.  The seller doesn't know why I lost financing other than what the letter said, "debt-to-income too high" so he really has no idea what he's talking about and the fact that I do indeed have proof that I tried to get this loan.  He's been VERY dishonest and difficult throughout this, but that's saved for another time.

Message 1 of 19
18 REPLIES 18
Ron6262
Regular Contributor

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

    I wouldnt worry about being sued.  I dont know what state you are in, but I remember both times I sold my home the realtor cautioning me that the seller can basically back out at any point and theres little that can be done.  I am sure anyone can sue for anything, but once an attorney is consulted or the other parties realtor steps in they should back off.  Sorry to hear about you dissapointment, this is a crazy process anymore.

Message 2 of 19
Anonymous
Not applicable

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

Thanks for your encouragement!  My realtor is NO help and it has felt like she has been working with the seller more than myself, as the buyer.  I plan to call and speak with her broker tomorrow to see what he says about all of this, though.  At this point, I couldn't get financing even if I wanted to so I have no idea how he thinks that he will sue.  He is incredibly arrogant and said that he will get liquidated losses because he doesn't feel that I tried to get financing.  However, we had a preapproval letter and we paid almost $400 for a home inspection plus we paid over $400 for the appraisal.  I'm betting that he thinks that I did something on purpose to lose the loan because I did sign a mutual release form a couple of weeks ago.  This was because we never had both parties' signatures on the repair addendum so I used my right to walk away, based on what my contract states.....the fact that we didn't come to an agreement on repairs.  He and my realtor then threatened to sue so I felt obligated to proceed with the loan.  I did this and have proof that I did.  It was not my mistake/fault that my loan fell through.  I guess if he wants to take it to court, I would imagine that the judge would find in my favor and the seller would pay my attorney fees.  ??

Message 3 of 19
germaine47
Frequent Contributor

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

I wouldnt worry about the Seller suing you.  When I signed my contract on the home it stated that it was contingent on buyer reciveiving financing, or something to that affect.  Read your contract, if your realtor was business savy then it should protect you in the event that something to this nature may happen.

Fico September 2012; TU 681, EX 674, EQ 652
Fako October 2012: TU 706, EX 641,
Message 4 of 19
Anonymous
Not applicable

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

Wow, your realtor is a jerk! & I would make sure his broker & every other person you talk to finds out that he is. Sounds like they are trying to bully you. Your contract should be contingent on your financing & even if it's not, it sounds to me that you tried in good faith to get the loan so I'd push back & tell both of them that you will see them in court. And also tell the seller that you will be counter suing for your attorney fees. You could probably find something to threaten to sue the realtor about too if he's been that dishonest. Smiley Very Happy Don't let them see you sweat!

Message 5 of 19
Anonymous
Not applicable

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

Thank you all for your support!  We, of course, did not show up to the closing since we didn't even have financing.  Our realtor has blown us off and told us to now contact the broker or legal council.  We called the broker, left a message a couple of nights ago and never heard back from her.  We have been left to completely fend for ourselves with all of this.  We just looked at the new home listings online and the seller has relisted the home for sale.  So I guess he plans to sell it and also wants to obtain liquidated damages from us. ??  Can we now place a lis pendens on the home or would this not apply?  We are suppose to speak with an attorney tomorrow.

Message 6 of 19
Anonymous
Not applicable

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

(off-topic....my new screenname is a bit different than my original one.  I couldn't remember my password....not sure what in the world I did wrong).

Message 7 of 19
Anonymous
Not applicable

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

By the way, I am not worried about the earnest money, although it would be nice to have back, but it was very little.  I just want him to sign the mutual release form so that this is all done and over. 

Message 8 of 19
StartingOver10
Moderator Emerita

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

There should be an FHA addendum on your contract since your financing was FHA. There are some very specific provisions in the addendum to protect the buyer (if your addendum is like ours here and it should be).  Those provisions are to protect the buyer from this type of issue. 1) You can't lose your deposit in the case of the lender not being able to approve your loan and 2) If the property doesn't appraise for the contract price, you don't have to close.

 

Your agent doesn't sound like he is representing you or your interests in this purchase from what you have posted. Is the agent you selected the listing agent? The seller sounds like a bully too. You may need to get an attorney to write a letter to the agent and to the seller to put this behind you.

Message 9 of 19
Anonymous
Not applicable

Re: Lost Financing for a Home Purchase and Now the Seller Wants to Sue

Our FHA addendum didn't use those exact words.  You are right about what you said....we've had no one helping us through this.  It's funny that you called the seller a bully because this is EXACTLY what we have said about him from the very beginning (along with a few other words).  Now that they put the house back on the market, should we talk with the attorney about the lis pendens or wait until we know for sure that he plans to sue?  I could see him being the type to take the home off the market if we put the lis pendens on it and proceeding with court, but if we don't force his hand into signing the mutual release then I seriously doubt he will.  I really don't think that he would win in court so I guess if he wants to go that route, we can.  I honestly lost financing due to financial aid deferrment/IBR issues.

Message 10 of 19
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