Can a comitment letter for a loan approval be canceled for reasons other than stated in the letter?
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Can a comitment letter for a loan approval be canceled for reasons other than stated in the letter?
I was conditionally approved for a refi loan
with stipulations that i had to pay off 2
credit cards that had balances and i had to
provide proof. I have completed this.
Now thw bank is saying that the appraisal of
the ho.e was lower than expected and it wasnt
aprroved anymore. This was not a condition of
my comitment letter and the appraisal was in
there jands before i got this letter.
Asked on December 6, 2018 under Real Estate Law, Indiana
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
This would be a legitimate reason for cancellation. The committment was for a loan for a specific property with a specific value; if the value of the property is lower than expected, that is a change in the basic conditions under which the loan is sought, and such a change invalidates the loan at the lender's option. If they were asked to loan for a property worth X, they do not need to loan for a property worth, say, 90% of X.
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