Mortgage Contingency, seller keeping deposit

[tongni]

I'm in NY.

I recently put down a deposit of 55,000 (10%) on a 550,000 apartment in midtown. In the contract was a contingency that I would get my deposit back if I did not get a mortgage within 30 days. I got an approval letter from a lender with a "no documents loan" and my attorney forwarded that to the seller. The bank then started asking for more information, tax returns, etc, saying that they needed some more information to complete the loan even though the entire loan was supposed to be without presenting those documents. Eventually they dropped me as I did not have them and my lawyer says that if I do not find a new mortgage soon I will be out my deposit because we forwarded the confirmation letter.

My credit score has dropped also during this time and I find it impossible to find any loan at all. Am I out of luck, or is my lawyer wrong? Thanks a lot for any help you can offer, I am really worried about this situation.

[FlyingRon]

Depends what the letter your attorney sent said. If he released the contingency the seller is probably due some damages for your breach.

[You Are Guilty]

If it's beyond the 30 days at this point, I'd explore negotiating some sort of settlement with the seller. There's a decent chance that you might not be entitled to your deposit back and litigating the issue will only end up costing you several thousand more. Something is always better than nothing.

[efflandt]

How exactly was the contract worded? Because if you have not closed, you have no mortgage. But if it was based on financing approval, that might be another story. Do you have anything in writing subsequently rejecting the tentative approval or loan, not that it would help if the contingency was poorly worded?

It pays to be specific when a contingency goes into the contract, so it is in your favor. And I never understood why people release contingencies before the closing, giving up their safety net.