Good Afternoon,

My husband and I are currently in the process of a refi/ renovation loan. We applied in early June(1st) . We submitted all the necessary documents and then some, that day. We were told we should have the comment letter back in a week, though it normally takes 2 business days they are running behind. Well it took close to 5 weeks. It stated that the loan must close by July 30th or we would have to start the process all over again. In the mean time. The broker could not arrange for the appraisal or the engineer study until the letter was received. The appraiser came July 13th. and the report came back incomplete and needs to be contested ( broker feels appraisal is too low and the comps- were not even from our neighborhood/ school district, in addition to information being left out).

Here it is July 29th- just got an email asking for more paperwork( which was already submitted in June) and  an added note stating the guidelines have changed for the approval- the loan is not to exceed 80% of the value of the house. When we went in June we were told it could not exceed 90% of the value of the house.

Now for the questions:

Can the mortgage company change requirements as the process rolls on?

Since the hold up for the closing was due to the mortgage company,underwriter and the broker, should they be held accountable? The underwriter knew closing by 7/30 would be impossible for this product and all the steps that had to be completed. The underwriter took 30+ days for his part alone!

Do we have any recourse against the Mortgage company?

We have done our part- the broker is stalling in responding this past week.  Since the mortgage company did not do things timely, isn't it logical for them to extend the date of completion? 

any information would be helpful!!! Thanks!

Is the broker or lender using either an FHA 203K product or the Fannie Mae HomeStyle Renovation product?

1.  Yes the mortgage company can change their requirements during the process.  Any bank/lender has the right to change those until the loan has closed and funded.  You just happen to be caught refinancing during a bad time for the mortgage/real estate industry and the changes keep coming.  I've had changes come through that have killed loans for my customers, that's just the nature of the business these days. 

2. + 3.  You've applied for a loan, but there's no guarantees on the time frame or even if the loan will ultimately close.  Therefore you can't pursue any recourse (I'm assuming you mean monetary recourse) against any of the parties you mentioned.  The reason it took 5 weeks to get back to you is that many banks are extremely backed up, due to low home prices and rates, and so they don't have the manpower to keep up with new submissions.  So the underwriter probably didn't look at your file until just before you got the comments/conditions.  The broker should have been aware of that though so they were not being upfront with you about the timeframe.  The underwriter works for the bank and reviews the loan to ensure the information is correct and that you qualify for the loan.  If for some reason they said it had to be closed by a certain date but that's not possible, then they're just passing that informaton on and letting everybody know what needs to happen. 

Why did they require the closing to go through by 7/30?

Hi,

Neither. I believe this is a fairly new product through Wells fargo. The loan amount is based on the appraisal the house will be worth the renovations will be completed. We are putting in 100K worth of renovations, have 1st mortgage balance at 201K is a FHA at 6.25%. The home was appraised at 350k- but the appraiser left out many upgrades already completed, sq. footage to home, and rooms in addition to using the incorrect comps for a different neighborhood and school district.

We had originally looked into just doing a refi with cash out, but were talk into this product because our house will be basically completely refinished, only thing needed to be done is the landscaping!

Scott,

I just pulled out the commitment letter, it is listed as part of the conditions of the loan.( closing by 7/30). It does not state why. it states

"all loan transactions must be completed by 7/30, or application but be resubmitted."

When I asked what that meant- " we start the process all over." I said "new appraisal, engineer survey, etc? " He said yes but that has never happened. We have already spent over $1000 in fees, that would have to be paid again. That is part of the reason I am baffled. We did our part, I do not see why we would hove to do all the paperwork over ( finanicals, estimates(7 separate), credit reports, etc.), and spend another $1000, to be in the same place a few months from now.

We do not want monetary recourse, more like the loan to close and honesty. We have contractors(7) waiting, who submitted their bids- which were already approved before the commitment letter was completed.They were all dated the date we submitted the mortgage application.They will be expiring too, and will have to be resubmitted.

The broker is the only one at wells  fargo within a 50 mile radius of where we live that deals with this product. So we have to deal with him. Lately staus updates do not come by any type of communication unless I get upity.

Thanks

Sorry to hear that this has turned into such a mess.  I think your broker is either not well informed or not being totally upfront about what is going on behind the scenes.  I can't see any reason why the loan would have to be closed in such a short time frame.  Most lenders will place a time limit of 3-4 months at least before they would need the loan to be re-submitted, no 60 days or less.  But if it's a new loan product they may have some other restrictions in place.  That would probably pertain to getting new bids on the construction or some other reports from the engineer as to why it would need to close or be submitted again.

I would probably consider talking to the broker's supervisor to see if they can help clear things up and make sure it will close without any other problems.