Can our mortgage fall through at this point??

Question

My boyfriend and I are in the process of buying a house. We are set to close on 3/23. Yesterday our mortgage broker called and said we may have problems closing because we do not have enough money in our accounts to cover closing cost. Nowhere along the lines were we ever paying closing costs...the seller agreed to cover all costs at the start. We've paid for the inspection, attorney, etc. Can things fall through at this point because of this?? Our broker recommended we add our names to my boyfriends fathers bank account to help it look like we have the money if we needed it. The problem is we are in Virginia and his dad is in South Dakota. It's very unlikely we will be able to do this 6 days before closing. Shouldn't our broker have brought this up before..she's known exactly how much money we've had from the start.

Answer 1

What your mortgage broker is asking you to is commit is misrepresentation = Fraud. What she is trying to make it look like is that your boyfriends father's money is actually money that you have. The lender might buy it, they may not. If they do buy it and your home is foreclosed on they can hit you with missrep for declaring money that is not yours as your own.

As others have mentioned, you can get money transferred into your account but you will have to source where that money came from. Money that pops out of nowhere is a cause for concern for lenders because it could be a cash advance on a credit card which they will have to adjust your debt ratio to reflect the new payment amount from the new debt. Of course borrowing money to show reserves is also frowned on. Your boyfriends father could declare it as a gift to you with no expected repayment.

In some instances lenders may require reserves, additional money after the closing, as a safety net for borderline borrowers. Since closing costs are covered by your seller I'm guessing this is what it actually is. Why your broker is not telling you this I have no idea.

I don't know the specifics of your case but misrep is fraud. Your loan officer dropped the ball but she is working to make sure the loan does not fall through for you, and protect her paycheck. Will you get hit for missrep, probably not. Can this be pulled off - probably.

I've done underwriting and quality control with several different lenders. This happens all the time and I've seen loan officers try to pull this stunt all the time and we have nailed a number of them, seldom do we pursue the borrower but they can still be placed on the hook for going along with it.

I'd play hard ball with her at this point. Complain to her boss about what is going on, threaten to report this to the Bureau of Financial Institutions for Virginia, The Virginia Association of Mortgage Brokers, and National Association of Mortgage Brokers. This will make them sweat and come up with a legit solution. See if you can get your rate dropped to PAR since I'm guessing they are also making back end points on the deal (charging you a higher rate and getting paid by the lender)

Ultimatly, you'll have to come up with the money so even you just temporarly borrowered it as a "gift" from your boyfriends father you can maybe get a little better offer from your mortgage broker for dropping the ball so bad on this deal.

Answer 2

With all the crap going on in the mortgage world right now your broker probably thought everything was as it should be till last week when the roof caved in. Yes your loan could very well fall through.

Call your broker and ask if they are able to do FHA loans if they can they should be able to convert your loan to FHA. As a rule in these loans the seller can pay up to 6% of the sales price as closing cost. The title company and your lawyer has to have a purchase agreement that spells out that the seller pays closing cost and how much those are.
FHA does not require reserves . Your broker should NOT have recommended you to add your names to your boyfriends fathers account- don't do it-most companies require that the funds be in your account for at least 60 days before you close the loan- if they find out that the account has been open for 10 years but your names have been on it for 2 days it looks very bad.
If your broker can't do FHA find one that can.

Hope this helps

Answer 3

Ok, deal with the "who should have said / done what" later. Now you need to be concentrating on making the mortgage work.

If boyfriends father (or any other relative) is prepared to help, get them to transfer the money into your account.

If you cannot, then can you temporarily get some money out of your credit cards to put into the account - not ideal I know but better than losing the mortgage after you have paid the fees.

I agree - if you have been told the other side will pay - you are justified in being mighty angry - BUT that is little use if everything falls through - so my suggestion is DO something positive in the meantime to try and get the funds required.

You didn't say how much the shortfall was - so it is a bit difficult for us to be much more help at the moment - but PLEASE worry about who's fault it is LATER - for now, deal with doing whater it takes to keep your mortgage - so all the fees you have paid already are not wasted.

Mark

Answer 4

They should have told you. They want it to appear you have money to cover your first payment. We borrowed money from my mother in law, had it in there for a few days, and then took it out and gave it back to her. Maybe try to find someone that could do this for you? Transfers can occur over the phone.

Edit:
Actually, our mortgage guy offered to put some of his own money if we needed it. Your mortgage person does not want to lose this deal either. You may ask him or her since they did not notify you in a timely manner.

Answer 5

they should of told you from the start yes your mortgage could still fall through i hope it dont and good luck with this

Answer 6

yes get the money transfer to your account or else it will fall though try anything at this point and good luck