Lender backed out after agreeing to terms.

[David Levin]

Hey everyone- 

I signed a term sheet and app with a private lender. Then they ran my credit, which is in the high 700s. We are rolling! But the next morning the broker shoots me an email. It reads 

"I am really sorry but underwriting didn't realize that this was multifamily yesterday afternoon when they reviewed the file. They said this is a loan we won't be able to do right now. I should have been more clear with them when uploading the file".

Insane. Anyone ever had this happen? Can I dispute the hard inquiry? 

[Jeff Copeland]

Unclear exactly what you mean by private lender. Private lenders don't normally have an underwriting department. I assume you just mean it wasn't a conventional lender.

I understand your frustration (I really do...real estate investors, agents, and brokers get run through the ringer by lenders on a daily basis, and I am all three!). But ultimately: 1) you applied for a loan, 2) they submitted it to underwriting, and 3) underwriting said no. 

What is their to dispute? (The inquiry will have a minimal impact on your credit). 

Signing a term sheet or a rate lock, or getting a thumbs up from a loan originator, does not guarantee you anything. Underwriting has the ultimate say. 

Be thankful they got back to you right away, rather than six weeks into due diligence on a property with earnest money on the line!