Deposit refund and denial of loan

[gonzov234]

We were going to purchase a home that has been being built by a builder over a three month period. We paid a total of $3800 in earnest money deposits and upgrade charges thru the process of the home being built as required by the builder. Now that the final walk thru's have been set up and the financing has to be finalized it has been discovered that we do not even qualify for the loan/home and we are being told that we will not be getting any of our $3800 back ($2500 lot deposit, $1300 upgrade charges).

The lending company representative is asking us to find a co-signer so that our numbers are up to make the loan work but not taking into consideration that we cannot afford the payment with just my husband and my income even if we did get the numbers up to where they need to be. Plus we do not have anyone that can take on that responsibility for us just to get a home. We already have a foreclosure and bankruptcy on our credit history and we have worked for many years to get our credit cleaned and do not want to get into that situation again.

Who can we contact in regards to getting out questions answered. We need to find out if they are allowed to keep our $3800 since they should have had us pre-qualified before this point. This just feels like a scam to sell a house to raise the market on the future homes to be built in that area (since i started the process 3 months ago, the price of the home that i purchased has gone up $20,000+ for anyone wanting to buy one today and have it built). Our realtor has not been completely helpful throughout this process and he is agreeing with the lender/builder and says that there is nothing he can do to get the money back either.

 

[mightymoose]

Financing is your responsibility, not the builder's.
Were there any contracts or agreements signed when you paid the money? Your answer likely is within those documents.
I suspect you are out of luck. You should have secured financing before moving forward on anything.

 

[gonzov234]

There was a pre-approval from a finance company that WE chose through our realtor before doing anything to even look for a home.

When we went to this particular builders development and decided to buy they had us change to the in-house lending company which is also associated with the builder. The in-house finance company did not RE-approve us before giving the approval to the builder to begin construction. When the in-house lender received notice from US that in three weeks the builder would be doing the final walk through's is when they started the process to complete their paperwork and identify their issues resulting in why we were denied. The only way to make the loan work is to get a co-signer and/or ten's of thousands more dollars in down payment money to be eligible for the home. We did everything exactly as we were instructed by the lenders.

There is a clause in the documents that states if we are denied financing then we would get the funds back. That is not what they are honoring now because they said that we are too far into the process and they are going to lose money on our upgrade picks because they are already in the house and that is why they are not giving the money back. We would not have gotten this far into the process if not for the lending company doing their paperwork incorrectly for 3 months.

 

[army judge]

There was a pre-approval from a finance company that WE chose through our realtor before doing anything to even look for a home.

When we went to this particular builders development and decided to buy they had us change to the in-house lending company which is also associated with the builder. The in-house finance company did not RE-approve us before giving the approval to the builder to begin construction. When the in-house lender received notice from US that in three weeks the builder would be doing the final walk through's is when they started the process to complete their paperwork and identify their issues resulting in why we were denied. The only way to make the loan work is to get a co-signer and/or ten's of thousands more dollars in down payment money to be eligible for the home. We did everything exactly as we were instructed by the lenders.

There is a clause in the documents that states if we are denied financing then we would get the funds back. That is not what they are honoring now because they said that we are too far into the process and they are going to lose money on our upgrade picks because they are already in the house and that is why they are not giving the money back. We would not have gotten this far into the process if not for the lending company doing their paperwork incorrectly for 3 months.

You can ask for a refund.
They can refuse.
Only a judge can issue a court order that allows you to attempt to collect (enforce) your judgment.
That will only happen after you prevail at trial.
So, if they refuse, its off to court you must go.

 

[mightymoose]

If you have documentation supporting your right to a refund then you have a starting point. Be sure you have complete documentation and that there is not another clause limiting the refund time period.
If you are forced to sue for the refund you can ask for the full amount plus some of your costs. I suggest you take your paperwork to a local attorney who can review what you have and advise further.