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Can a lender recall full loan amount because he cannot sell it?

I have refinanced my loan two months ago to a lower repayment term from 15 years to 10 years and also to lower the interest rate. I never took any money out of the refinance. I have plenty of equity in the house (around 40%). I am making my monthly payments regularly and have never been late in the past. Recently, my lender approached me and called for full repayment of loan as he is unable to sell the loan. The reason he stated that I didn't informed him that I left my job a week prior to the closing. Since I don't have any employment, and no means to repay the loan, he is unable to sell the loan. He will use mortgage fraud as the reason and therefore I have 30 days to repay the loan in full.

I am currently employed and have no intent not to repay the loan. I in fact took the refinance to repay the loan quickly by reducing the repayment terms from 15 to 10 years and paying higher installment than the previous loan. I signed the separation agreement with my previous employer after the closing date but the effective date for termination of the employment was a week before the closing.  I also took another 30 yr loan from the same lender to buy a house for rental purposes, which was closed two weeks before my refinance and date of termination of employment. The lender is not recalling that loan because he was able to sell it to a bank and it has a higher rate of interest. Both loans are under my name with same financial information.

Can this lender recall the full loan as it will be very difficult for me to pay the full amount in such a short time. Can he prove mortgage fraud when I have no intent to defraud him. Quick response will be helpful. Thanks.
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August 15 2013 - Philadelphia
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Answers (3)

We lenders do a Pre-Funding VOE (verification of employment) to eliminate these types of issues so apparently they didn't do one. Now if we called your employer and they knowingly gave us false or misleading statements or verifications, that's a problem.

Switching jobs during an escrow does happen, but it's your responsibility to inform the lender of your job change. Was it fraud, that will have to be left for the Attorneys and a court if it goes that far. As long as you continue to make payments, then were are the damages? You haven't defaulted.

We are a direct lender, and from time to time something can come up where the original investor kicks the file back, but we have 10 other investors that we can sell to. I wonder if they are limited investor pool and have no one else to sell off to. My advice is to contact an Attorney and ask for guidance.

Best of Luck!
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August 15 2013
The best advise any of us can give is to speak with a qualified Real Estate attorney. I know an attorney out of West Chester Pa, who is regarded as the best RE Attorney in the state (Pa). Please feel free to give me a call or email and I will be happy to provide you with his contact information.
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August 15 2013
This is a little confusing.  How is it that you signed the separation agreement after the closing, but the effective date was a week prior?  Also, one of the final steps in all mortgage closings is doing a verbal verification of employment.  How did you employer answer that question?  

Unfortunately, there is a very real possibility that the loan is not sale-able.  In which case, your lender may have no choice but to exercise the "due on" clause.  Have you talked at length with them?  Since you are once again working perhaps they could do a no cost refinance to repay the existing loan and get you into a new loan.

I know this probably sounds ridiculous to the average person; however, every loan is really a "island" onto itself and, it must be marketable on the secondary market for resale at any time.  The fact that you were technically (per documentation) unemployed at the time of closing is potentially damaging to the instrument (loan).

You could also contact a real estate attorney.  Perhaps a stern letter from an attorney could entice the lender to reconsider and restructure the loan to ensure salability.

Lastly, whether or not your lender is a direct lender, or broker, may well dictate how your situation is resolved.  It is far more likely the lender will come up with a resolution if the lender is direct.  If a broker, it is highly likely the broker is in a buy back situation and he/she has not recourse at this time.

Wish you the best,

Deborah
NMLS #279125
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August 15 2013
 
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