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Legal rights for failure to fund

I signed the closing papers on a refi and did not cancel because I wanted to complete the refi which included funds for more expensive home renovations. The lender has not funded the loan or canceled the loan from their end. But my original loan is coming due on more payments to remain current as well as interest having accrued. Can I still cancel the new loan since they have failed to fund the loan? If not what type of recourse might I have, do I need to seek a lawyer? by spedia918 from Colorado Springs, Colorado. 13 days ago Reply


Ralph Richard Guertin (ralph@absolutelowrates.com)
#1 ranked lender in Florida - 675 contributions

Good Question, there is a 3 day right of rescission but it sounds like you are past that. Did you sign that rescission notice?

13 days ago
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Yes I did, that is why I am feeling unfairly trapped. Like I have to pay on the old loan to avoid loosing my house, but also have the new one hanging over me with the lender free to issue it at any point it better favors them.

13 days ago
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Nick Bebout (NickBebout)
#101 ranked lender in Colorado - 30 contributions

There may be something holding up funding, such as not having a clear to close on your new loan. However, they should definitely be in communication with you to let you know what is going on. If your current mortgage is due for 7/1, you have until 7/31 to make the payment before a 30-day late payment is reported to the credit bureaus. I would suggest hounding the lender you are refinancing through for some answers.

13 days ago
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Kay Cleland (kay@kcmortgagecolorado.com)
#3 ranked lender in Colorado - 221 contributions

Hello. You have a legal right to cancel the refinance within 3 business days. Holidays and Sundays are not counted. I would suggest you contact your loan officer to find out what has happened. You can also contact the title company direct, and that contact information is on your Closing Disclosure. If you are past your 3 business days, then you do have a new loan. Have you verified with title that they have or have not wired/funded?

13 days ago
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,717 contributions

Something isn't right. I'd jump straight past the Loan Officer if they are not giving you answers, and try to contact an upper management person. I also always suggest make all existing loan mortgage payments when due, regardless of any refinance in progress transaction, because there is never any guarantee of a closing, and you don't want to generate late payments on the existing loan of for some reason you don't close. Then finally, this is another prime example of why choosing the correct Loan Officer (notice I didn't say company) is such an important part of the process. Good Luck

13 days ago
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,369 contributions

You need to call your loan officer and find out why the loan has not funded.. What you did was called a cash out refinance.. there's a 3 "business" day waiting period after you sign loan doc's.. so that' could be the delay.. if it's been more than 3 days, then your loan officer should be able to explain why it's not funded yet.. regardless, you are responsible to make your mortgage payment on the existing loan.. and you don't want to ever go more than 30 days late.. that could cause the loan to be denied.. Understand the lender will re pull your credit prior to funding to be sure you did not take on any new debt.. if your mortgage payment shows a current 30 day delinquency, the lender will not fund the loan. As far as being able to cancel the loan?? That's a good question.. I've never seen anyone want to cancel the loan after loan doc's have been signed but not yet funded.. But the mandatory 3 day waiting period is there for this very reason, so you can definitely cancel if you are inside of the 3 business day waiting period.. but if you are outside of the 3 day's?? My guess is you still can if the loan has not funded, but i would talk to your loan officer before you do anything.. I'm a preferred Lender with California and Arizona being my primary markets. 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 NMLS# 226347 / LendUS, NMLS 1938/ AZMB0121893

10 days ago
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