Please help me! Can a lender increase your loan's interest rate?

[dnfinity]

Mountain View, California

Hello,
In May 2007, I bought a home from "Pulte Homes" and they reffered me to their internal ledner "Pulte Mortgage".
Pulte Mortgage gave me a good faith estimate with approval letter. On the Approval letter that is indicating the loan amount and interest rate, there is also an Expiration Date of 11/10/07. I signed the approval letter and sent to Pulte Mortgage immediately after I received it. Then Pulte Homes collected a check for $20K from me to start construction (Due to finish in Dec 2007). Today (8/9/07), I received a call from Pulte Mortgage that the loan package that they offered me and approved me for is not available anymore and I should get a loan with much higher interest rate! Can they do that? Considering the fact that their offer expiration date hasn't come up yet? Can I file a lawsuit against them?

Please give me some advice...

Thanks...
Al

Mountain View, California

[ed209]

Did you sign a lock-in agreement at the time you signed the GFE? Some lenders offer a long term lock-in agreement, where you pay a fee or accept a higher interest rate. Otherwise the rate will float, regardless of the program you're approved for.

What was the interest rate on your 1003 or loan application? You can argue you didn't apply for that rate.

The mortgage market is really tough now. Lenders are going under and Alt A programs and below are vanishing. What was the program you originally got approved for? Maybe you can reapply for a full doc program if you originally did stated income, etc.

Also remember, you can shop outside of PHM for a mortgage. Lastly, I assume that 20K was your earnest money deposit. Check your sales contract to see where that 20K is to be sure it isn't tied to any financing promises.