Can a mortgage company force me to close before the expiration of my lock in date?

Question

I have been "cleared to close" on a mortgage, however we are still waiting for an approval of a short sale offer on a house. Yesterday the mortgage company's (Countrywide) attorney contacted my attorney to say that we MUST close by this Monday because "guidelines have changed". Can they force us to close before 8/11 which is how long my lock in is good until? As you can imagine everyone is putting pressure everywhere to get this done. Countrywide would not elaborate on what "guidelines have changed" means. Is this a fallout from the BOA buyout or are they trying to wrap up closings before the end of the month so it looks better on their financials? Thanks for any insight.

Answer 1

It all depends on the terms as outlined in the application.  

Ultimatley the answer is YES.  You control the rules when you have the money.

If you need to make it happen. Contact the Short Sale Lien Holder, and explain that your window to exercise you purchase is closing on the date specified.

The sooner you speak to the Short Sale Lien Holder the more plausible it will be for you to complete the sale.

Answer 2

no probably not as when the investor may be pulling out of the type of loan you are doing and there may be a last day to close these types of loans -- In this market it is changing daily.

I am a mortgage banker in TN & KY

Answer 3

Yes, they can.

You don't seem to understand that what they are doing is a FAVOR.

They are giving you notice to close that the loan program that your loan was  originally created under, no longer exists, and they are willing to make you an EXTENSION, instead of a DENIAL.

I can tell you that BOA is consolidating alot of Countrywide's products and doing away with alot of their higher risk programs.

Answer 4

"Guidelines have changed" means they are changing their rules for lending, so the product you previously qualified for may no longer exist if you don't close before a certain date.  Lending rules are getting stricter and stricter, the sooner you can close the better.

Answer 5

You didn't explain why you would want to delay.  I think you'd be glad to have it done with and go.  You are dealing with a private company.  They can have any rules they wish.  Why would they be obligated to change their plans because of your interest rate lock.  What if you had a 120 day lock.  Do they have to wait.  

Everything is a mess when dealing with lenders today.  More horrible news about the President of Countrywide in yesterday's Wall Street Journal.

Answer 6

There could be a couple reasons...They maybe trying to get you to close for a couple reasons, one is they feel that you may go somewhere else, their lending guidelines may have really changed, Your loan will probably not make a huge difference in their financials unless you are buying a $10 miilion home. Lenders change their guidelines when ever they feel like it and they give a target date on when the loan needs to fund by in order to still qualify under the old guidelines...Sometimes loans are lost becuase of the changes...I would call them and ask what guidelines have changed and put pressure on them to tell you what has changed and how it affects you...The guideline changes might be becasue of the BofA takeover..

Answer 7

They can't force you to close but they can up the rate (and even pull the loan) if you don't.  However, if the short sale is not approved you will have no choice but to wait.  Not sure why they are so worried about you closing quickly but its strange times right now.

Answer 8

You question isn't clear to me.  You are either buying a house where the seller owes more than it is worth (short sale) or you are selling a house for less than the debt (short sale), and buying another.  In either case you have to wait for the lender to approve the short sale before you can close escrow.  Do NOT let anyone force you to move quicker than you feel comfortable.  You cannot close escrow or purchase the house without knowing the purchase price.  Get a new attorney!