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Can a bank charge you to cancel a loan when no paperwork was signed and nothing was said before hand?

Hood River, OR |

We are first time home buyers. We locked in a mortgage rate with a bank and 2 days later we had the inspection on the property. It was so badly water damaged in the crawl space that we backed out of our offer. I called the bank to let them know we weren't moving forward with this property, but wanted to still use them for lending. The loan officer canceled it then took money out of our account. We never got any paper in the mail and we didn't sign anything electronically. We were only told that if they ordered an appraisal & we canceled, we would be charged. Is this legal? If not, how do we go about getting our money refunded? Our branch rep told us that they should have offered to transfer the loan to another property, but that wasn't done either. Thank you!

Attorney Answers 1


Trying going up the management tree - start with the Branch manager then see if there is a district manager - then try the national corporate office. Usually the higher you go the better the response.

I am a bit confused by the "we locked in a mortgage" and "we didn't sign anything electronically". How did you lock in a mortgage without something to lock it? On the one hand if the bank was moving forward at your request and incurred costs getting an appraisal there may be some justification for you to pay for the bank's out of pocket cost. On the other hand the these transactions are usually done in writing with full disclosure of all the estimated costs of the loan. Giving a written estimate of the loan costs may be required under State or Federal Law (not my area but I be if you Google this you will get more information.) It is suspicious that they had an appraisal in only two days. It doesn't sound like the type of appraisal where an appraiser goes out to the property but rather something they pulled from a data base electronically which should have cost very much.

So work your way up the management structure complaining, ask for all the paperwork for this loan that they have, ask to see the appraisal they are charging you for, as to see the written estimate of the loan costs they should have made, research whether this type of loan would have required a written estimate of loan costs (ie what type of loan was it and what are the federal requirements for this type of loan). Ask them for their receipt for the appraisal that shows what it cost them. (Check to see if they did the appraisal during the two day window when you called and then canceled.)

Yes there can be enforceable oral contracts but I tend to agree with your. Home loans are an area subject to strict state and federal regulations and if you dig you may find that they didn't comply with the law.

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