Lender Can't Sell Loan - says I owe money AFTER Closing

[Dean Baluch]

I'm in a tricky situation with my first deal.

I closed on an investment property in Georgia and about 10 days later the lender is saying that the deal violates a Fannie Mae guideline in that the cash back at closing exceeded 2% of the sales price.  Subsequently, I am required to send the balance back into escrow, which will be refunded to the seller.  They say I am liable because I signed a document saying that I would offer assistance if they decided to sell the loan.  If I do not, they would rescind the mortgage.  

I'm having a hard time believing I am liable for their mistake. Their reasoning would imply that they could unilaterally change the HUD for any reason if it helps them sell the loan.

The title attorney and broker haven't offered too much help to date other than to ask if the lender would eat the additional cost (they will not).  

Appreciate any perspective on this issue.  Who should be representing my best interests here?  Anyone recommend a good lawyer to assist in this matter?

[Bill Gulley]

Clearly their error and assistance means executing any document necessary, giving additional information and bringing any pre-paids current, not necessarily paying cash to bring them into compliance. How much is it? I'd say it was their matter to comply with their loan restrictions as you aren't expected to know what they are required to do, and the deal you agreed to was the amount you borrowed and were to receive as a cash out. Their blunder, not yours. You will, however, need to pay it or sue after they resend the loan and 10 days is a little late. In other words, even if a lender messes up, they can call the note, you'll need to defend it and costs may or may not go your way, you can be right and it could still cost you. Weigh the options, speak to an attorney, if you fight it, to count on using that lender again either. I'd rather tell them to hold the loan until the LTV cam into line, selling it later, that is if the lender was a bank. Otherwise, see your attorney or just get out the check book. ;)