Lender liability question

[Eddie Ziv]

I have a situation where I lost a property due to lender's slow processing (This is a major bank not an investment lender)
It's kind of a long one so bare with me.

Back in December of last year, I found a HUD property in Birmingham, AL that needed work. Following the recommendation of my real estate agent at the time, I turned to a well known bank which offers a compounded 1st and a rehab loan. After a lengthy process I was approved for a loan with expiration date of June 12, 2009 Although the loan included the initial mortgage and the rehab work, it was a general approval based on my financial standing, not attached to a specific property.

Further exploration of the property revealed that the work needed was greater then initially thought. That new fact compounded with the stringent requirement by that bank, forced me to back off the deal. As a results, I notified the loan office who handled my loan, that I am backing off the HUD deal for the reason previously mentioned and that I'm in pursue of an alternative property.

Days later I notified the lender that I found a another property (REO) that doesn't require any work. The agreed selling price was $36,000. The house was in an excellent shape and you could not find a house in that shape even close to that selling price. For reference, according to tax record the house was sold in December of 2005 for $88,000. 2008 Tax assessed value is $65,500, Cyberhome estimate is $82,863. Houses in the close area are selling now from $69,000 - $149,000. My thought was that this one is a no brainer since I have already been pre-approved. All is left to do, so I thought, was to get an inspection and appraisal of the new property. Both reports passed in living colors, so no problem there. Then I found out that despite the fact that I have a pre-approval letter, and already went through the approval of an underwriter, I now had to go through the process again with a different underwriter and a processor.

Weeks and Months went by and the loan would be not finalized. The constant excuse was that the loan processing department is backed up with refinance requests and they haven't got to deal with my loan. Despite my repeat expression of concern, the loan officer kept claiming that I have nothing to worry about and eventually the loan will close.

On May 11, 2009, two month after starting the process of acquiring the loan for the 2nd property and after two extensions, I was notified by the seller that closing documents must be on the seller's lawyer's desk by Tuesday, May 13 to close on May 15,2009 the deadline date. The seller also noted that they will not extend the contract anymore.

At that time the loan was still in process . Not receiving the documents in a timely fashion, on May 14, the seller put the property back on the market with a $4000 price reduction.

All my efforts to move things faster (Including contacting the regional loan Manager of the bank's mortgage department) did not produce any result. On May 18, I flew to Birmingham, and talked directly to the loan officer and his boss. That conversation produced no results. I suggested to put another offer in, with the original agreed sale price ($36,000 which is now $4,000 higher then the reduced listing price) pending a commitment from the bank that the loan will eventually go through. They refused to do so. On May 19 I noticed that the property has disappeared from the MLS which means the seller has accepted another offer. Later I was told by my RE agent, that the house was sold for a cash offer. Practically five days after the property was placed back in the market.

My question here again, is do I have a legal case against the bank that aside from the obvious losses (Travel, due diligence costs, etc) I suffer a higher loss based on the fact that houses like this are selling for twice as much in the immediate area?

Thanks,

E.Z.