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Realtors & Attorney..Please help. Mortgage Declined & Sellers holding me liable.

By
Real Estate Agent with Just Jersey Real Estate.com

BackGround:
We extended a contract on a property with 20,000 deposit and I was provided a Mortgage commitment, however a day before my closing, I was told Bank (BOFA) had a glitch in their system and could not close. After several run arounds & after a week of delay BOFA finally declined me for mortgage due to high income to debt ratio. This was mainly due to the fact that, they approved me based on my W2 (My loan processor knew all along I was self employed) and during underwriting they used average income from my business tax returns, thus was dis-qualified.

Problem:. Based on my mortageg contigency on my contract, requested Sellers to cancel the contract & release the deposit. However to our shock, Sellers are holding us liable just b'cos we had mortgage commitment and they are claiming that we didn't act in good faith to close the house and has caused undisclosed amount of loss. What are my choices now, how can I come out of this situation. Please advise.

I can't give you legal advice but I can speak from experience. I hope you have an attorney guiding you through this ordeal. That being said your contract should have a mortgage contigency clause that CYA in this situation. In New Jersey the Buyer can almost always (with a good attorney) get out of any deal with no damages in your case it seems easy because the bank failed to loan you the money. If you still want the home you should consider applying to a credit union where they are better situated to deal with the self-employed. Bigger banks are notorious for puling that $%&#@ the day of closing (one BOA in particular).

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