Screwed by lender, any recourse? Out $2200

[Joe T.]

So my lender did a pre approval on me about 4 times and I confirmed with them several times that I would be able to get a loan on a non-owner occupied duplex. Fast forward to 2 weeks before closing (yesterday), my lender sends me an email AFTER my financing addendum ends stating that they do not believe I will qualify the loan, and that my income needs to be about $100 more a month. By this point, I have already done my inspection ($480), appraisal ($740) and my earnest money ($1000).  My realtor even sent my lender an email 5 days before stating that the third party financing addendum will be up on the 26th, and that if I am not approved for this loan, I will lose my earnest money. On Saturday I get an email from my lender explaining how I will not be able to get the loan now. I told my lender that he needed to figure out a solution, because if they do not approve my loan, I am transferring all of my accounts away from them and canceling my credit cards etc.. He stated that he will talk to the underwriter again on Monday and get back with me.

The only solution he offered to me was to increase my down payment by about 20k. That means I would be putting down 46% on the property.... (seriously?)

My question is what recourse do I have here? Can I sue over this in small claims court? They seemed very confident when they pre-approved me 4 times... now they wait until after I spend over $2200 to tell me that I can't get a loan over a HUNDRED dollars.

[Russell Brazil]

No recourse really. This is why it is important to use lenders with strong guidelines for preapprovals. On the next  go around consider using a lender that actually sends your information through the underwriting process and gives you a commitment letter instead of a preapproval letter. Having a lender who can actually close the deal is often more important than getting the best terms.