Last-minute mortgage offer withdrawn by bank

siu2009

Hi,

I am buying a new built flat through government's HomeBuy Direct scheme. My solicitor has exchanged contracts last week and the completion date was set to be next Wednesday.

Today my solicitor told me the bank has withdrawn the mortgage offer which was made in early October. The reason of the withdrawal is not known yet and my solicitor is trying to find out from the bank. I don't really know why... Can a bank withdraw a formal offer in that way? i have not changed any conditions since my mortgage application. (eg. no job loss, no income decrease, etc..) Proper valuation has been done. It's a 3-year fixed rate offer and I am just borrowing 75% of the house price.

The fact that the contracts have been exchanged means that I am committed to buy the flat. According to the contract, I will have to compensate an amount equivalent to 10% of house price (as deposit) to the developer if I cannot complete the purchase. I am now left in a dire situation. What should I do if I cannot secure the mortgage money before the completion date(only 1 week left)? has anyone dealt with a last-minute mortgage offer withdrawal?

Any help and advice?! Thanks.

Joe_Bloggs

Consider naming that bank. It may help others who are considering dealing with them.
J_B.

siu2009

The bank is RBS. Anyone had bad experience with them?

Joe_Bloggs

Perhaps a pattern will emerge if involved citizens report their experiences.
J_B.

spectre

There is a policy via the FSA called "Treating Customers Failrly"
Google it and check your options.

Banks very very rarely withdraw mortgage offers unless theres a very good reason to do so. (ie breaking one of the mortgage offer conditions etc )

I too was paranoid about a mortgage offer being withdrawn at the last hr, its a nightmare and i feel for you , best of luck.

sgh1976

siu2009 wrote: »

The fact that the contracts have been exchanged means that I am committed to buy the flat. According to the contract, I will have to compensate an amount equivalent to 10% of house price (as deposit) to the developer if I cannot complete the purchase..

You should have had a clause put into the contract, that states if the Bank pulls out of the mortgage offer you are not bound to pay any compensation. I thought this was a standard contract clause for HBD

sgh1976

siu2009 wrote: »

The bank is RBS. Anyone had bad experience with them?

RBS have been a nightmare for a lot on the HBD scheme. The went in all guns blazing when it was launched then started to reject people, who ended up getting slightly worse rates from......the Halifax.

They probably want you to reapply with Halifax, where you now have to pay an additional 5% out of your own pocket to get the mortgage offer and probably a 2 year fixed at 5.17% (compared to the 4.57% or something RBS had on the table for HBD)

Cazza

A lender is entitled to withdraw a mortgage offer at any point, for any reason they see fit, up until completion. In reality, in my 10 years in the mortgage industry I only saw it done once, two days before completion.

Do you have a mortgage adviser? This is something they should be sorting out for you and it's where using someone, rather than DIY comes into it's own.

Firstly, you need to find out why it's been withdrawn. It could be a simple misunderstanding. If not, you need to go completely mental, absolutley nuts on them. Please don't start swearing down the phone though, they will just cut you off. Try the dog with a bone tactic. If they say they need to talk to a manager or an underwriter and they'll call you back, tell them your're happy to hold, even if it's 20 mins. It clogs up the phone system and they just want to get rid of you, so they have to deal with the problem. If they really do have to go away and work on it, call them on the hour, every hour for updates and information. Irritate them into getting it sorted. Be very assertive and do not back down. Threaten them with Treating Customers Fairly (TCF), the FSA and legal action to recover your 10% plus fees. Bully them. That's the tactic I used for my client and then lender (not RBS) backed down in the end. Good luck!

Conrad

siu - get straight onto the chief mortgage compliance officer at RBS and assert they have broken the 'treating customers fairly' rules laid down by the FSA. They must at least tell you why it's withdrawn.

siu2009

Thanks for all replying!

My solicitor says that it is the homebuy direct scheme that the bank does not like. It doesn't sound making sense as people normally are borrowing no more than 80% of the house price through the scheme and the risk to the lender should be far lower than those without the scheme.

Anyway my solicitor is arguing for my case as she has long ago notified the bank the exchange date and completion date and has got the bank's go ahead before the contract exchange. The HomeBuy agent is also made aware of this. I also rang alarm to my financial advisor (required by the HomeBuy scheme) who arranged my mortgage application.

With all the parties alerted I hope the bank will bow to pressure. fingers crossed....

SouthCoast

It is very, very rare for a mortgage offer to be withdrawn after exchange of contracts. Can you keep this thread updated?