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Can a bank cancel a loan almost 60 days after closing?

I closed on my HARP 2.0 refi on 10/15. The loan was funded and I made my first payment on 12/1. A few days ago the lender emails me a loan application and asks me to sign and return. I don't just sign my name when someone tells me to. I told him I was happy to send them a copy of whatever I signed at closing. They told me they didn't want a copy of what I signed at closing, they needed me to re-sign the initial application I signed off in May because the application had been incomplete and their investor needs a completed initial application. I don't want to sign anything post-closing especially because the interest rate on the application is .25 higher than what I signed at closing. Today they told me that if I dont sign, my loan will be cancelled. Can they do this? I closed almost 60 days ago. by Katyar_461_266 from Jersey City, New Jersey. Dec 11th 2012 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

First let me say.. no.. they cannot rescind the loan.. once it's been funded and the deed recorded, it cannot be undone unless there was fraud involved.. More than likely, the reason they are asking you to sign something is because somewhere in underwriting, someone missed something.. you signed a disclosure stating that you would comply if asked to sign something post closing, so you would be in breach if you didn't sign the corrected document.. The interest rate on the new application is nothing to worry about.. the interest rate on the note and security agreement is what your payments are based on, and if they were asking you to sign one of those documents, I would decline... keep in mind that if you don't sign the new app, then they could sue you for damages, so it's best that you sign it.. if you're not sure, you can contact a local attorney and seek their advice, but in our industry, we see this all the time and it's really nothing to worry about... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Dec 11th 2012
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Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 2,211 contributions

I understand the concern you have about signing, but be careful. William is using symantics. He is right that they cannot cancel the loan. BUT they can call the loan due and payable in full for breach of contract. Different things but the same outcome. Because a borrower always signs the agreement to cooperate post closing, your failure to do so would be that breach. Here is the real question. Are they asking you to sign a new NOTE or just the application? I'll bet if you look at the original application you signed when you started the process; it bears the same rate as the one they are asking you to sign now. The NOTE dictates your interest rate, not the application. Also, just because you sign another application after the date you sign the note and it is for a different rate, the note rate still prevails. What you are being asked to do happens quite frequently. If they are asking to sign just the application, I'd do it. Not signing it will only cause you more grief than you want. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Dec 12th 2012
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Brian Paris (bparis)
#633 ranked lender in California - 51 contributions

Have them correct the rate and sign it. This is common, a lender will sell your loan to a servicer and if the servicer finds something unusual or incorrect they will ask the initial lender to have it corrected. This is all they are doing. They cannot cancel the loan. If you don't sign it they may be forced to buy back the loan and service it themselves. You are at no risk, in fact you can make correction in pen, initial them and then sign and return. Hope that helps.

Dec 11th 2012
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Chris Gummerson (cgummerson11)
#397 ranked lender in California - 648 contributions

Also, the initial application is not what is on your loan docs. The initial is just the starting application. Yes it is common to have the lender come back after closing. It would be very helpful if you worked with the lender to get this resolved. They funded the loan, with a mistake possibly in the application. So now the investor needs it to be corrected, or the lender will be forced to repurchase the loan, at a huge expense. I do not see anything wrong with signing the initial application, as your loan amount, or interest rate that has been locked, and funded will not change. You would be helping the lender, who helped you fund your home loan. Good luck

Dec 11th 2012
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John Barbato (blueelephant)
#4 ranked lender in Delaware - 26 contributions

First, I commend you on your prudence and due diligence as they are important in these matters. You did however sign a document at closing that you would comply with signing and/or providing any documentation for any errors and omissions. I would look through your settlement package to review. It sounds like its just a matter of compliance...meaning the lender needs proper initial disclosures signed (that were either missed or incorrect at the time) and included in file to meet delivery standards of the investor in order for it to be sold. It should not change or affect the final terms (your recorded Note) of the new loan you now have. Check the dates of the documents you have been asked to sign post closing. I would also suggest requesting a signed letter from them to affirm something along the lines of what I have stated above to make you more comfortable; I would like to believe that should not be a problem for them to provide. For extra measure and comfort, you may also forward a copy to your title agent or attorney for confirmation as well. From the dates given when you started and completed the process, you're probably in disbelief about having to actually deal with more loan paperwork. I hope this helps and that you have a quick resolution to this issue.

Dec 11th 2012
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

Actually the loan could be cancelled if it was done be a bank but Very Doubtful. As mentioned above the lender is probably trying to sell it to a servicer and that servicer wants it completed. It also protects you to do what they ask so the that the loan doesn't fall back to the loss mitigation department and they require you to submit all your docs again to make sure there was no Fraud happening. I know of a two people that this has happened to. To put your mind at ease, your Note is the ruling document in the whole transaction and if they were asking you to resign that then you would have some serious concerns as to what was going on.

Dec 11th 2012
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Crestico Funding (CresticoFunding)
#317 ranked lender in California - 340 contributions

Request a copy of your signed/final loan documents if you don't have a copy, make sure all the information on the new application that have been sent to you matches either the very Initial loan application you signed or the final loan docs., in that case, they are just asking you to resign the same documents which is not a big deal. but either way, this is not a common practice in california and its frowned upon if we go to the borrower 60 days after close of escrow to ask whole new sets of documents.

Dec 11th 2012
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Barb Lanis (BarbLanis)
#69 ranked lender in Illinois - 663 contributions

John@ and bparis have the best advice here... The lender can't rescind the loan at this point and it's likely just a compliance issue. If there was any fraud involved, that's a different story. Honestly, it can be just a bad scan/copy of the documents and the investor wants a clean copy. Keep asking your questions. Although, it's not a good thing that they sent the "compliance collectors," but I suspect that they may have already made several requests from you...

Dec 11th 2012
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