Legal Question in Real Estate Law in California

Re: Guarantee for funds for a Mortgage

Not every business deal that goes sour or every loan that fails to close results in a legal cause of action. Experienced mortgage lenders in particular are very careful to protect themselves at all stages of the deal's documentation so as to avoid liability to the prospective borrower if they pull the plug on the loan prior to funding.

In any particular case, the possibility of a successful suit by the prospective borrower would be very fact-specific and an attorney would have to read the lender's documents carefully to look for anything resembling a commitment to lend. If a commitment is expressed or can be inferred from the lender's documents, the lawyer would then look to see whether there were "continuing warranties or representations" by the borrower that were not met, or any other ground for reneging on the "commitment." Commitment letters usually are conditional.

So, although most loan documentation is drafted to preserve the lender's right to pull out on slight pretext, not every loan offer is so tightly drawn, and some pretexts for backing out are impermissible even under the most protective fine print.

Unfortunately, there is no "one size fits all" answer for these cases. Short of hiring an attorney, however, you could ask either your real estate broker or your escrow officer for their opinion. They will have had access to the documents and understand the business, and are there to serve you.

Re: Guarantee for funds for a Mortgage

I do not recommend a lawsuit against the mortgage broker. You may, however have a claim under the Fair Debt Collection Practices Act or Fair Credit Reporting Act against the person who made the false report. You would need to show that you contacted the person who made the report, told them about your need to obtain financing, and gave them enough information to prove you were not the person liable on the debt. If they then refused or failed to remove the negative report you may have a legal cause of action against them. Some of the evidence you should have to prove your case would be phone records to show you made phone calls the the reproting agency, the names of the persons you spoke to, and proof you would have been financed if it were not for the negative report.

Re: Guarantee for funds for a Mortgage

from the facts given, the "language" on the commitment letter and/or loan docs would tend to dictate what legal rights you may or may not have in respect to your possible claim. i would advise you to have an attorney look over your specific documentation that you have in your possession in order to further evaluate your legal claims here. at that point, you will know if you have recourse or not. if you would like further assistance in this matter, feel free to email me for a more in depth evaluation.