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Lender's name on P&S

We are about almost ready to sign the P&S for a home we are buying. Our attorney has added the name of the lender that we will have to use in this manner - 

As used in this paragraph, "diligent efforts" shall require BUYER to apply to one mortgage lender and it is agreed that BUYER's application to <lender-name> shall satisfy such provision and the term "commitment" as used in this paragraph shall be a binding commitment in writing and shall contain no conditions other than conditions that BUYER can reasonable satisfy. In addition, it shall be a condition of the Buyer's obligation to perform under this Agreement that the Lender obtained appraisal be equal to or greater than the purchase price. If the Lender obtained appraisal is not equal to or greater than the purchase price then at the BUYER's election any payments made under this Agreement shall be forthwith refunded and all other obligations of the parties hereto shall cease and this Agreement shall be void without recourse to the parties hereto. 



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My question is, does this bind us to use only this lender and not change the lender after P&S ?

  • February 22 2013 - Medford
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Answers (5)

As you look into buying you are told you should have an Agent (Buyer's Agent) look out for your best interest. You should always look into hiring your own Attorney, the banks have their Attorneys on staff or who they use regularly. But in Mass you can hire your own Attorney to represent your best interest while he/she still works with the bank direct or the bank's attorney to get to closing. Food for thought if you buy again in the future or to suggest to friends/family looking to purchase.

  • February 28 2013
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Profile picture for Ofe Polack
Since you are working with an attorney, you should seek his/her advice.  Obviously since the lender recommended him, the lender wants to continue with the transaction hence including the name of the lender, which is not included in other documents that are more generic.  Discuss the issue with the attorney, otherwise it would become too confusing.
  • February 22 2013
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Deb's answer is a good one.  Ask your attorney.

Agents and REALTORS (why use a REALTOR http://tinyurl.com/624omlz) facilitate a transaction and are conduits for information exchange between Buyers and Sellers and have fiduciary responsibilities to represent the party they are agents for and to put their party's interests first.  Agents should not try to practice law, that's what your attorney does and is there expertise.

IMHO, I'm not sure why inclusion of the lender's name is needed in your contract with the Seller.  Ask your attorney why that's a must have in the clause.

Appraisal component of the language is making it clear to all parties that you can walk from the deal if you want.  You should think about what you want to do if appraisal comes in lower than mutually agreed to selling price.  That is a real possibility if there are no comparable in the past 6 months in a close proximity to the home you want to buy.  It doesn't mean that you are necessarily overpaying for the property. It just means that the lender will only provide you with a loan for the LTV they are working with against the appraised value, not the selling price.  That would leave you funding the difference between appraised value and the selling price out of pocket.  Sometimes, Buyers fund the difference 100% out of pocket if they really like the home and other times there is a price reduction and the difference is split between parties.  Your agent should be able to explain the alternatives if this happens.

Best of luck with your new home purchase.
  • February 22 2013
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it was not short sale. Our attorney is recommended by the Lender (with whome we got quote) before P&S. 
  • February 22 2013
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Not sure how the property was sold, in some cases with short sales or bank owned the current lender requires you use them but this is a question for your closing attorney. I would suggest you call them.
  • February 22 2013
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