Hi, I currently live in a small condo with my husband that is worth a lot less than we owe. We have an excellent credit score and a decent income and are ready to move into a family home. We did the calculations ourselves and figured we needed about 20-25% deposit on the 'dream house' we were looking to buy. We met with a mortgage broker and he excitedly told us that we would only need to put 10% down because of our excellent credit and that the monthly payments were not that much different so we could spend the rest of our deposit on improvements if we wanted. He also looked at refinancing our current townhouse at the same time but he couldn't reduce the monthly payments enough for us to qualify for a streamline loan. In the mean time, another broker that we had worked with in the past let us know that we would be able to refinance the townhouse with her.
The house we were buying was a new build, so we had a month from sending all of the documents that were asked of us to the broker until we could do our final walk through. We did the final walk through, expecting to be waiting for underwriters and signing in a few days. A week later the broker started asking for more documents. Another week later he announced that he had miscalculated my salary and we would actually need to bring 20%, pay off my car loan and refinance the current townhouse. We brought 20%, paid off my car and went ahead with the re-finance as we were asked to do. Keep in mind, both brokers were aware that we were buying a new primary residence and planning to rent out our townhouse (we have written proof of this). The FHA streamline loan went through. A week later we received a call from the broker telling us that he couldn't process our mortgage because we had refinanced the town house. FHA streamline refinances require that you occupy the house for one year.
We are wondering if we have grounds for legal action for both parties. First, for miscalculating our income - we did come to the table with 25% which would have kept us well under the 45% debt to income ratio. Second for insisting that we needed to refinance the house despite knowing that we had an FHA mortgage. We also think that the second mortgage company made a major error by processing the loan despite the fact that we were honest and upfront about planning to purchase a new house.
This was our dream house and now we have lost it, not through not qualifying, but because two mortgage brokers did not do their job. They even had over a month to think about things. Do we have any rights here?
Thanks
Extra Note: The refinance document that we signed did mention occupancy twice. The first was a checkbox "we currently occupy the property", the second stated that "lenders would be required to occupy the property for one year after first occupancy". First occupancy for us was three years ago so we had no clue that we were doing anything wrong by signing this paperwork.
The house we were buying was a new build, so we had a month from sending all of the documents that were asked of us to the broker until we could do our final walk through. We did the final walk through, expecting to be waiting for underwriters and signing in a few days. A week later the broker started asking for more documents. Another week later he announced that he had miscalculated my salary and we would actually need to bring 20%, pay off my car loan and refinance the current townhouse. We brought 20%, paid off my car and went ahead with the re-finance as we were asked to do. Keep in mind, both brokers were aware that we were buying a new primary residence and planning to rent out our townhouse (we have written proof of this). The FHA streamline loan went through. A week later we received a call from the broker telling us that he couldn't process our mortgage because we had refinanced the town house. FHA streamline refinances require that you occupy the house for one year.
We are wondering if we have grounds for legal action for both parties. First, for miscalculating our income - we did come to the table with 25% which would have kept us well under the 45% debt to income ratio. Second for insisting that we needed to refinance the house despite knowing that we had an FHA mortgage. We also think that the second mortgage company made a major error by processing the loan despite the fact that we were honest and upfront about planning to purchase a new house.
This was our dream house and now we have lost it, not through not qualifying, but because two mortgage brokers did not do their job. They even had over a month to think about things. Do we have any rights here?
Thanks
Extra Note: The refinance document that we signed did mention occupancy twice. The first was a checkbox "we currently occupy the property", the second stated that "lenders would be required to occupy the property for one year after first occupancy". First occupancy for us was three years ago so we had no clue that we were doing anything wrong by signing this paperwork.
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