Conditional mortgage commitment and mortgage contingency

[markoboston]

Massachusetts: Our P&S agreement has a standard mortgage contingency clause stating that the mortgage contingency shall be satisfied if the buyer obtains a mortgage commitment by a certain date. We are the buyers. Our lender issued a mortgage commitment letter by the date specified in our P&S agreement, but the commitment letter was subject to several conditions, one of which in our opinion means that the mortgage commitment letter does not in fact make a mortgage commitment. The condition in question states that the bank must obtain a fourth satisfactory appraisal to issue the mortgage to which it has supposedly committed. (It has already obtained 3 satisfactory appraisals that were very close to the purchase price.) Because we do not consider this a real commitment, we requested an extension of our mortgage commitment date. The seller's attorney claimed that this letter satisfied our mortgage contingency despite this condition and initially refused to grant the extension. (The loan officer did not help our case by sending vehement e-mails insisting that our mortgage contingency was satisfied despite the bank's appraisal condition.) The seller's attorney later relented and granted us an extension on the commitment. Now, our extended date is only three business days away and the lender has not yet released the results of its fourth appraisal, which it supposedly requested a week ago. What should we do if the lender has not removed the appraisal condition when our mortgage commitment extension expires, just 8 days (6 business days) before the closing date? What if the seller's attorney insists that our mortgage contingency is satisfied and refuses another extension and the bank actually fails to provide the mortgage specified in our P&S? Can it really be that we would forfeit our deposit through no fault of our own?

[HomeGuru]

Originally Posted by markoboston

Massachusetts: Our P&S agreement has a standard mortgage contingency clause stating that the mortgage contingency shall be satisfied if the buyer obtains a mortgage commitment by a certain date. We are the buyers. Our lender issued a mortgage commitment letter by the date specified in our P&S agreement, but the commitment letter was subject to several conditions, one of which in our opinion means that the mortgage commitment letter does not in fact make a mortgage commitment. The condition in question states that the bank must obtain a fourth satisfactory appraisal to issue the mortgage to which it has supposedly committed. (It has already obtained 3 satisfactory appraisals that were very close to the purchase price.) Because we do not consider this a real commitment, we requested an extension of our mortgage commitment date. The seller's attorney claimed that this letter satisfied our mortgage contingency despite this condition and initially refused to grant the extension. (The loan officer did not help our case by sending vehement e-mails insisting that our mortgage contingency was satisfied despite the bank's appraisal condition.) The seller's attorney later relented and granted us an extension on the commitment. Now, our extended date is only three business days away and the lender has not yet released the results of its fourth appraisal, which it supposedly requested a week ago. What should we do if the lender has not removed the appraisal condition when our mortgage commitment extension expires, just 8 days (6 business days) before the closing date? What if the seller's attorney insists that our mortgage contingency is satisfied and refuses another extension and the bank actually fails to provide the mortgage specified in our P&S? Can it really be that we would forfeit our deposit through no fault of our own?

**A: that should not be the case if your financing contingency was written correctly.