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Can I be forced to take any non-FHA Loan from a builder so they can justify keeping a 5% deposit?

Need advice!! my wife and I recentlyrecently 5% deposit on a condo. We were told the only way to get it back was if we weren't approved for the loan. The development is not FHA approved as well, so the loan needs to be a conventional loan. We were informed through email by the lender associate that our debt to income ratio needs to be lower (54%). We were told that to move forward we would need to get rid of debt. After discussing it, my wife and I decided not to move forward with buying the condo. When we informed the builder associate, we were told that they will talk to the lender and find a way. We stated that we already have and we've decided not to move forward. We were then told that we will lose the 12k+ we gave because they are sure they can get us approved "somehow". Is this legal??
  • October 30 2013 - US
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Answers (4)

Profile picture for shanek45
Hamp, Thank you. I would think the same. The deposit was a 'good faith deposit' contingent on being approved for a conventional loan, to which we are not. I will take the advice regarding the regulator..
  • October 30 2013
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It depends on what the contract says. If it says your deposit was non refundable, or some similar language, then it is legal to keep it. If your contract was contingent on you obtaining  financing that is "suitable", "acceptable", or some other subjective word, then you should get your deposit back. They can't make you qualified if you aren't. They also can't make you accept financing you don't find agreeable. You may want to counter their hardball game by threatening to complain to the Real Estate and/or Home-builder regulatory agencies in your state.
  • October 30 2013
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Tim, Thank you for no real answer to my question...
  • October 30 2013
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This is why you should go to a lender 1st to know what you can borrow and this is why you need a realtor on your side to protect you from builder contracts that protect only a builder. Your hole might be deep depending on what you have signed. Since it sounds like you decided to go it alone you might want to go visit a lawyer.


tim
  • October 30 2013
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