Good post Nime, I'd always looked at the Mortgage Contingency from the buyers prospective.  You shed new light on it for me today.

Nima.  Things are a bit different in my area, especially when dealing with experienced agents.  We don't accept offers from buyers without a strong lenders letter that states that they have reviewed the credit report, verified income to qualify and money to close. 

At that point, if the contract is accepted, the buyer sticks with THAT lender because the seller accepted their contrace with that lender.  The buyer can go to another lender for a loan, but he MUST continue to process that loan accepted with the contract.  If the buyer wants to change lenders, he needs a new lender's letter from the new lender which will then have to be accepted by the seller. 

Once we get a written loan commitment, the financing contingency is removed and if the buyer then doesn't settle, he loses his deposit. 

Forget about the attorney in these transactions.  In MD and Northern Virginia, AGENTS CONTROL EVERYTHING.  The only attorney involved is to do the closing and even that can be a title company.

Agents control the transactions here and buyers who get off course with lender shopping, not providing documents, communicating with the lender, WILL lose their deposit money.

We have one buyer who defaulted a few months ago because she couldn't get the interest rate she wanted.  She lost her $5,000 deposit, has settled $20,000 in damages to the seller and I have an order for $3,000 plus $500 expenses to my company because the seller forced me to file an Interpleader to dispose of the deposit money because I was the escrow agent.

Folks who mess around here pay big time.  I've found over the years that keeping buyers' and sellers' feet to the fire, especially in matters of financing, makes transactions go much smoother.

Lenn