Legal Status of a Mortgage Offer?

trudiha

How legally binding is a mortgage offer, my mortgage company have issued an offer but they are now asking for extra information, is this normal or legal? My circumstance haven't changed and I haven't held back information at any time.

I've read a bit on here about mortgage companies duty to Treat Customers Fairly, is this part of a code of conduct, if so, where would I be able to find the rest of the code?

mr_mortgage

trudiha wrote: »

How legally binding is a mortgage offer, my mortgage company have issued an offer but they are now asking for extra information, is this normal or legal? My circumstance haven't changed and I haven't held back information at any time.

I've read a bit on here about mortgage companies duty to Treat Customers Fairly, is this part of a code of conduct, if so, where would I be able to find the rest of the code?

It's 'Treating Customers Fairly' and you can find out more from the FSA here:

http://www.fsa.gov.uk/Pages/Doing/Regulated/tcf/index.shtml

happybroker

If you haven't held back any information and your circumstances haven't changed then you shouldn't have anything to worry about.

Lenders do come back for more information after offer from time to time and its perfectly legal, they reserve the right to withdraw the offer of funding at any time up to completion if something new comes to light but obviously they have to have god reason.

What sort of thing are they asking for and I can let you know how "normal" a request that would be?

trudiha

My partner is a discharged bankrupt. I told them about this during the initial phone application interview, the mortgage adviser I spoke to ran a credit check and said that it would be no problem. The rest of the application process trundled along, the house passed it survey and the offer was sent out. Then my solicitor again informed then about the bankruptcy, as he told us he was obliged to do and now they have asked for a statement from my partner explaining about the bankruptcy and a letter from the Official Receiver confirming that they will have no interest in the property.

The OR are, understandably reluctant to issue this letter as they feel it could in the future be used as a 'get out of jail free card' by my partner. They say that the Discharge Certificate is an official court document and that the lender should be happy with that. The OR also say that the lender will have first charge on the property so that even if my parter were to be declared bankrupt again, which is of course not our intention, they would only be able to see any equity we have in the property as an asset.

happybroker

Thanks for that, it is pretty normal that this would be asked for if your solicitor has mentioned it to them.

Provide them with the explanation and the Discharge Certificate which should really be sufficient. The OR is being very picky with this, the letter they send would have a case number on it and they should be able to confirm that they would have no interest in the property with regard to that file, removing the doubt over the "get out of jail free card".

Try again with them aswell as sending what you have into the bank.

Good luck

_Andy_

Was the BR disclosed on the mortgage application?

trudiha

_Andy_ wrote: »

Was the BR disclosed on the mortgage application?

Oh yes, if I hadn't told them, I'd have mislead them and I wouldn't feel that they were being in the least unreasonable.

Conrad

The OR in line with others such as CCCS (debt managment charity) are becomming more reluctant about issueing documents other than those they issue as a matter of normal business, so it is no surprise they do not want to issue an ad - hoc letter re thier future intentions.

You say the telephone adviser said up front the bankcruptcy wont be an issue. That's an irresponsible statement to have made, as they know full well underwriters are paid to underwrite, which means carrying out further actions as they see fit. He should have explained up front that the underwriting process can take many paths, and nothing is certain.

In terms of TCF, his statement that 'banakcruptcy would be no problem', is at odds with an organisation that claims to deliver TCF outcomes.

dunstonh

The offer letter is allowed to be withdrawn before the mortgage is completed. It is very unusual but has happened a bit more frequently in recent times as lenders change their lending criteria and cases that were very borderline under old criteria would be rejections now. However, that has been used mainly on cases that have been very slow going through and require new offer letters as the old one expired.

It is usual for underwriters to review a case before an offer letter is issued. Not after (apart from above). Is it definitely an offer letter you have received and not perhaps an initial confirmation of terms?