At what point does a mortgage offer become binding on the Lender?

easygoinghoney

I am in the process of purchasing my first house. We have really been given the run around by the Lender who initially placed a £10k retention on the mortgage as they wanted certain things looking into - usual damp/timber/electrics/roof - all of which was done. The Lender would not accept the report on the roof because the invoice confirming the repairs done by the roofer was handwritten and not typed and so they considered as a result that he was not a professional outfit and wanted a second report. This was obtained and provided to the Lender on Tuesday attached to an email in which I raised an issue with regards to the title - the garden is a leased garden (this was clearly stated in the sale particulars, is very common in the area where we are buying, in fact the area is famous for this and so any valuer should certainly be aware of this if they value locally which we understand the chosen valuer does) - I wanted to make sure that this point was raised in advance of the lender preparing a revised valuation and before they offered so that we were not in a position where they lifted the retention and issued an offer which might require further revision.

Hence I emailed them to advise on Tuesday, as did my Solicitor. I also had two telephone conversations with our mortgage contact at the Lender as she said that the retention was being lifted and a new valuation report was going to be prepared and they would then consider offering. I specifically, again, raised the point concerning the garden not being included and she said that she specifically highlighted this point with the Valuer and his manager in bold, capitals and underlined and they had not raised any issue about this and it did not affect the valuation. I understood from this that the Valuer must have correctly already taken it into account when valuing.

We subsequently received the formal mortgage offer on Wednesday for the full purchase price.

Then on Thursday morning when my Solicitor requested formal confirmation that he could proceed (he needed formal written confirmation that the valuation was correct despite the garden issue) and the Valuer has come back and said he was not aware the garden was not included in the Title and that this would affect his valuation and he will need to reconsider this and downvalue accordingly and we should wait to hear.

Nothing has changed in our circumstances or our application. There has been no new information. The Lender was fully aware of the issue prior to preparing the new valuation report and prior to making the mortgage offer. Call me old fashioned but basic contract law would suggest that the mortgage offer is the acceptance of the basic contract which then goes on to form the basis of the mortgage.

There is the usual small print that if thereare further investigations/fraud etc then the offer could be withdrawn. This is not the case, the lender was fully aware of this issue prior to revaluing and prior to offering.

It seems however that mortgage lenders can do whatever they want and are bound by nothing, even post mortgage offer?

amnblog

They can rescind a mortgage offer .

TrickyDicky101

It's probably more of a technical point, but would it be at the point the mortgage money is advanced or the point at which the purchase completes (seeing as these two can be at different times)?

amnblog

They can withdraw the offer at anytime before they release the funds should they have a reason to do so.

kingstreet

Our network saw a case where the funds were called back from the solicitor on completion day due to suspicion of fraud.

Thrugelmir

easygoinghoney wrote: »

It seems however that mortgage lenders can do whatever they want and are bound by nothing, even post mortgage offer?

You assumed that the Valuer had seen the revised report. Obviously not.

easygoinghoney

Thrugelmir wrote: »

You assumed that the Valuer had seen the revised report. Obviously not.

The Valuer did receive the report and the estimate for the work on the roof this is why they agreed to lift the retention.

In the covering email I advised them about the fact that the garden was not included in the title.

It is this point about the garden which is the issue. The Lender acknowledged receipt of the information. My Solicitor also confirmed the position. I had two telephone conversations with the Lender wherein it was specifically stated that this issue was highlighted with the Valuer (before the new valuation report - lifting the retention, and before the mortgage was offered).

They are now seeking, post-offer, to revise the mortgage valuation and offer but have provided no formal reason for the basis of this.

As far as I am concerned, the reason is the negligence of the Valuer if he did in fact miss (despite being advised and which frankly he should have considered anyway) something which materially impacted on the value. As far as I am concerned there is no basis for the lender to revise the offer. There has been no change to our circumstances or status or info available to the Lender before the offer was made. They were fully aware of the garden not being included in the Title before the Valuer agreed to lift the retention and before the mortgage was formally offered and this is clearly stated in correspondence.

Goldiegirl

easygoinghoney wrote: »

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As far as I am concerned there is no basis for the lender to revise the offer.

You've said that the valuer wants to reconsider the valuation - that's the basis for the amended offer, as the valuation of the property is one of the key points that the offer is based on.


Your status may not have changed - but the status of the property may change with a revised valuation.


Try not to worry too much, the difference in valuation may only be small, and it might not impact the amount that the lender is prepared to advance.


Just wait and see what happens


But the lender can amend or withdraw an offer at any time - although a total withdrawal is very rare, normally only in fraud cases this would happen

bebewoo

The valuer isn't Countrywide is it?

Mortgage_Mark_2

"At what point does a mortgage offer become binding on the lender?"

A: It doesn't, it's only when you sign the mortgage deed/contract.

easygoinghoney

bebewoo wrote: »

The valuer isn't Countrywide is it?

Technically yes, they were in house Valuers for Nationwide. They have now come back and downvalued by 42k!

Could cry.