Legal Question in Banking Law in Illinois

I was pre-approved for a mortgage; however lender doesn't want to give me the loan based on foreclosure showing up on my record when the file went to underwriter. Here is the catch, when I first applied for the FHA loan I never withdrawn any information from the loan officer. I informed that I had Bankruptcy Ch7 in 2011, followed by foreclosure (I didn't have the exact date of this event but this shouldn't change the fact that this information was provided to the lender). Before my credit report was pulled the officer told me that there is a Back to Work Program I qualify for in order to get the loan. Then he pulled my credit report and the foreclosure didn't show up. Based on this credit report my pre approval was issued, according to the loan officer I could go through regular FHA. I spent 6 months looking for a house, put offers on 16 homes, and paid total of $875 for inspections on the homes my offer was accepted, then I paid $395 for appraisal on the last home I had a contract on. Month into working up the loan the underwriter pulled Fraud Guard report and one of my foreclosed loans showed up, took another month of going back and forth with collecting documents in order to fit my case to Back to Work Program to be finally denied the loan as I don't qualify.

My question is how can I get my money back for all the expenses related to this and directly related to false pre approval? If they knew about my foreclosure they should dig until they found the records and then issue me the pre approval.


Asked on 8/10/14, 9:10 am

1 Answer from Attorneys
Lawrence A. Stein Aronberg Goldgehn Davis & Garmisa, LLC

It'll almost certainly cost you more to try to get the money you spent back than the amount of the money you spent. And you'll likely not get your money back. Pre-approval is not approval, no matter what the loan salesperson says. The lender does not have to give you a loan if it doesn't want to, especially if you have multiple, actual foreclosures, even if you told the lender's loan salesperson all about everything.

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Answered on 8/10/14, 9:22 am


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