Legal recourse for not disbursing funds after refinance closes?We recently got a call from Citimortgage (our current loan servicer) about refinancing under HARP. We have an 80/20 mortgage on a condo and are under water, never been late on a payment. We started a refi inquiry with Citi months ago, but never heard from them. When they finally called, we were very up front with the guy that we had just purchased a second house due to an expanding family, and it was up in the air as to whether we were going to sell or rent the first property. When we first inquired with Citi about refinancing, we still lived in the condo as a primary residence. We were very up front that this was no longer the case.Everything ended up being pushed through, we had to pay our property taxes early, a notary came to our house to sign all the docs. We were told we had 3 days to back out. Three weeks and MANY phone calls to Citimortgage later, we still had not heard from them and our loan was still not disbursed. My husband got a call back today, finally, saying that our loan was kicked back to Underwriting where they now refused to fund it because we own a 2nd property.We want to know, can they legally do this after providing us a GFE and after all of the paper work was signed to close the refinance? We were not evasive at any point about owning two properties, and they even saw evidence of this at the point of approval when they ran our credit report. We were assured many times that it wasn't going to be a problem. It seems unfair to us that 3 weeks later they can just say "sorry" without giving us any notice. We want to know if it's in our best interest to contact a lawyer. The refi was going to save us a lot of money over the next 25 years, and after being told that we could still go through with it, we decide to keep the property as a rental and rented it the month after the loan was supposed to close. Any advice would be great!March 25 2013 - Portland00YesReport a ProblemProblemSelect oneOffensive contentIrrelevant contentSpam (pure self-promotion)OtherDetailsYour emailPlease enter a valid email address.Submit CancelContent flaggedWe will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.We're sorry. This service is temporarily unavailable. Please come back later and try again.