Legal Question in Real Estate Law in Iowa
Can a bank deny a mortgage after they said you were pre-approved for a loan from them? My daughter/son in law 2 kids/This bank then said the house they were to purchase all was in good order and is sold. The inspection came back pristine and 5k more than the purchase price. The sellers are in their late 80's and needed a one floor home because of being ill. They found one and are moving as I type. Yesterday the bank had fired their underwriter and said the kids' loan may not happen. They are living with us right now because they sold their house and were waiting for 9.5 to take possession of their new home. This bank was asking personal questions I thought; after they said it was all completed they came back and asked for their checkbook statements from prior to the bank preapproving them. They wanted to know what they spent their money on, which was odd and a privacy issue I feel. That was none of their business how much they spent on groceries, utilities etc after they were to loan them the money. Can this bank withdraw their promise on the day they were to close on this house? Nothing had changed on my daughters finance, they had the down payment and the sellers were paying closing costs, all were ready to go.
1 Answer from Attorneys
Pre-approval is always going to be subject to underwriting.
One always has the right to take and shop the package at another lender who isn't so picky.
The issue I see here is that you are calling the bank's preapproval letter as a promise.
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