Mortgage Refinance Fell Through at Last Minute… Now What?

Seeking Advice
1

So, I went through the whole refinance process with ABC company, only to get a call less than 2 hours before closing saying there was a paperwork issue, and the closing was canceled. The processor contacted me, and after some back and forth, we realized they were missing part of my income info that I had already sent.

The processor promised her manager would call me the next day (Friday), but no call came. I tried reaching out to the mortgage broker on Monday, and even they didn’t know what was going on. By Wednesday, still no response, and that’s when I got a call from another company, XYZ, offering a slightly higher rate but lower monthly payments. I decided to send XYZ my info since ABC was MIA.

Then, today, I got a surprise call from ABC asking for more verification of the info they’d missed in the first place.

My question is: since ABC canceled the closing, is there any penalty for not completing the loan with them? I paid for the appraisal upfront, but XYZ said they could use it so I don’t have to pay for another. Am I on the hook for anything with ABC since this delay was on their end?

2

Just a heads-up, XYZ company will probably need a transfer letter to use that appraisal. Government loans allow for portable appraisals, but the originating lender has to release it.

As for penalties, no, there shouldn’t be any. Just keep in mind that your rate lock does have an expiration date.

Also, how are the payments lower with XYZ? Are they maybe not calculating your taxes and insurance correctly? Could it be they’re estimating a smaller loan balance?

3

@Han
That’s what I was wondering too. If you’re escrowing, taxes and insurance might not be accurate with XYZ’s estimate.

4

No penalty for you here, thankfully. That’s a rough experience though. You might consider leaving an online review or even emailing someone higher up in the company. Hopefully, it helps prevent future issues for other clients.

5

You’re not obligated to any lender until the actual closing. With refinances, there’s even a three-day right to rescind after closing too.

6

I’d seriously consider switching lenders. ABC couldn’t respond in a timely manner, and they messed up the income details. These things can happen, but combined, it’s not a great sign.

7

Higher rate but lower payment? Something doesn’t add up. Maybe XYZ is using a lower loan amount, or they’re underestimating taxes and insurance.

8

You got a call from a different company out of the blue? That’s unusual.

There shouldn’t be any penalties, though.

9

Quin said:
You got a call from a different company out of the blue? That’s unusual.

There shouldn’t be any penalties, though.

It’s called a trigger lead. Some companies pay credit bureaus to get the contact info of people who recently had a mortgage inquiry. The industry is actually trying to stop this practice.

10

@Clove
We used to be able to remove client phone numbers and emails before running credit, but somehow they’re still able to get them.

11

Uma said:
@Clove
We used to be able to remove client phone numbers and emails before running credit, but somehow they’re still able to get them.

Yep, now it’s a soft pull until the end, but it only delays the issue.

12

@Clove
I had no idea about that. Very interesting.

13

Quin said:
You got a call from a different company out of the blue? That’s unusual.

There shouldn’t be any penalties, though.

Sorry, I should’ve been clearer! I initially filled out a form on Experian.com, which triggered multiple mortgage companies to reach out, including XYZ. They called this week to follow up since ABC dropped the ball. I try to get at least three estimates for major expenses.