Legal Question in Consumer Law in Michigan

This is a long one. I am in the process of buying a home. Some time ago i disputed a debt on my credit report that was in collections, when the house i wanted came up for sale I contacted a morgtage company to see if i would qualify. They said yes, once the debt is resolved. I paid off the debt and was pre-approved. Then i filled out an actual app. once my offer was accepted by the seller (its a bank owned property owned by citizens). The mortage company had all sorts of issues i needed to resolve and our original close date was set for Nov. 18 2010. I solved these issues, then came more so the close date got pushed to Nov 22 2010...I solved these issues and then came more...the close date was then backed to dec 3 2010...then came more issues that backed closing to Dec 10 2010...One of the issues that came up very late was the disputed debt...they asked that i have the dispute removed. I did so, and today on dec. 12 2010 the mortgage co. called and said that although the debt is paid, now that the dispute is off my score dropped 12 pts below qualifing for the loan. They want to exted another 30-45 days and have me get a credit card, use the card and have it reported to raise my score up. Problem is selling bank will not extend that far and we are actually already out of contract. This entire time the mortgage co. knew about this issue, and has delayed addressing it until now when it is too late. Also this entire time they have been telling me that all looks good and we should close any day now...So, i put in my notice to vacate at my apts. My apt has already been rented out to someone else and come jan 1st my family will be homeless due to the mortgage co's lack of preperation and mis handling of my loan. Not only that, Im no longer able to buy the home because citizens will not extend that far. Do i have any legal right to sue the mortgage co. for messing this up so badly and ultimately causing myself, my wife, and 3 year old daughter to be stressing at the possibility of being without a place to live. If the mortgage co. (who deals with this stuff every day) would have handled this issue from day 1 (as they known about it for that long, and failed to clue me in) we would have our new home right now.


Asked on 12/13/10, 5:17 pm

1 Answer from Attorneys
Shelly Schellenberg MI & FL private practice

Your question makes an excellent point that no consumer should ever sign a purchase agreement to buy a property (subject to financing) unless and until he has, in his hand, a signed loan commitment, stating the amount of the loan, the terms of the loan, and stipulating that the loan is approved subject only to property appraisal and clear title.

Your loan application was simply that...an application, and because you never received a commitment from the lender, you have no contractual basis for a suit. If consumers could sue banks for messing up loan documents, and not processing loans in a timely manner, there would be no banks still in business.

You may want to see a real estate attorney regarding your contract with the selling bank. A closing date is a "target" date, and if you have a loan commitment, in hand, you may be able to prevent the selling bank from contracting with another buyer for the property.

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Answered on 12/19/10, 5:31 am


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