Lenders Cancelling Loan Offers
We reported some time ago about banks and building societies offering “phantom” mortgages and homeowner loans, where a loan product was advertised to customers, but was then mysteriously withdrawn at the last minute, or the borrower didn’t quite meet the lending criteria and so was rejected.
It would appear that this practice is still continuing, although now lenders seem to be withdrawing mortgage offers once the written loan agreement has been issued, in many cases just before the case is due to complete, thereby causing chaos and disruption for everyone throughout the chain of potential home buyers.
Of course it is written into the loan agreement that a lender is able to withdraw a homeowner loan offer at any time and without reason, but prior to the current economic climate this was seldom enforced, unless there were significant changes in the borrower’s financial circumstances which could have an adverse effect on the ability to repay the loan.
The news comes from Property Portfolio Rescue, who have become involved in a number of property sales to save chains from collapsing after a buyer has had their loan offer withdrawn.
Nick Hopkinson of Property Portfolio Rescue said “Frequently lenders are raising people’s hopes with mortgage offers, which as far as I can see, they never have any intention of honouring. In fact, I’ve heard of several instances recently of mortgage offers being withdrawn at the eleventh hour after repeated credit checks by lenders have adversely affected a buyer’s credit rating, causing them to fail the loan criteria.
Banks are simply not open for business apart from to the very best customers with the lowest loan to values, but they are disguising this unwillingness to lend by launching products to the market which have so many clauses and caveats that most ordinary people would have little hope of qualifying.”
