Refusing Loan

[EJAB]

I applied for a loan for a HELOC and was approved.  Before they sent any documents I canceled due to the fact that I found another lender whose fees were much, much less that the first.  Am I obligated to take the first loan, they mailed the docs to me even thought I canceled with them.  Can I be liable for any fees?  

[tedjr]

Howdy EJAB:

Did you cancel the deal in writing? What happened with the appraisal? Some companies will do an in house appraisal at no charge and will also have you incur no out of pocket expenses until the closing. You should be OK if you did not agree to pay any fees up front. Best to shop around before agreeing to do the deal.

[rbaxter]

You are not committed to anything until you sign at closing.  

[Lendinghand]

Your are not liable for anything.   Move on.

[Mdhaas]

I always reccomend that you shop around before committing to a deal.  I believe that the client should always have the right to walk away from a loan if they have been mislead.  

If you are just receiving the documents, then you have not signed anything yet and cannot be held liable.  Just tell the broker that you have found a better deal. Make sure that you are fair and talk with them prior to bailing out. Depending on the circumstances they may be able to be a little more competitive


A  lot of time and effort is put into the loan by the LO and Processor. So at least give them the professional courtesy of an explanation/opportunity.

If the situation is a gross abuse (much higher rate/fees, abusive conduct, etc.)  report them to their supervisor.  

Your documents may have already been on the way when you cancelled.  If you are not going to deal with that lender, just disregard them.

[EJAB]

I did call the loan processor to speak with her about cancelling because the broker said that he was basically out of the loop after a certain point.  I left a message on her voice mail because we were paying phone tag.  The broker did tell me that the papers were to be overnighted to arrive on a Monday but after I left him a email cancelling on Tues the papers were sent regular mail on Thurs.  Oh, he also said that there was no fee for the appraisal because it was done on the computer; but on the paperwork, there was a 175.00 charge.  The reason for cancelling was because I found a lender who would charge less that 10 percent of the first lender, 2 percent less interest rate and no prepayment penalty

[Lendinghand]

Couple of things here.

(1) DO NOT EVER work with a loan officer/mortgage broker if they claim to be out of the loop at any period of time during the process.  This is someone with limited knowledge and is just shy of a telemarketer.  This generally means there is some sort of control system set up within the companies internal structure which only boils down to a lack of trust or a lack of experience.  You should be in direct contact with the loan officer at all times and he/she should know every step of the process.  You should accept nothing short of a professional when dealing with your mortgage financing.  

(2) If you're dealing with a loan officer who has ordered the appraisal without you paying the appraiser at the door, then it will be most likely that that loan officer will be paying for that appraisal out of his/her own pocket.  I would be careful with the appraiser / loan officer relationship as I have heard of appraisers trying to collect from both sides which can get ugly if the appraiser doesn't get paid.  Ultimately, it falls upon the loan officers shoulders if he ordered an appraisal directly without having the borrower pay the appraiser upfront.  Including the appraisal cost inside closing costs may be an option, but if you the borrower decide to go elsewhere, the loan officer may get stuck with that appraisal fee.  Still, I have also seen an appraiser go after the borrower by threatening to place a lien on the borrowers title policy.  All and all, someone needs to pay the appraiser.

[Mdhaas]

I agree that if the loan officer claims to be out of the loop, then it is time to move on.

The LO should have a pretty good idea of where your loan is at in the process.  If they do not, as lendinghand stated, they are nothing more than a glorified telemarketer.

If you have not signed anything authorizing your accceptance of terms or have made any type of payment to the broker (commitment fee), then you can't be held liable.