Expert: Sue Bernstein - 5/11/2008

Question
Am I entitled to my Earnst money if the loan is denied.  Real estate agent was informed verbally and the seller's bank was informed in writting that my loan was approved, however we later found out that our loan was denied.  We put up Earnst money not knowing that we were denied and we put earnst money down and asked for a 60 day escrow.  Now that we found out we have been denied the loan, are we entitled to our earnst money back.  We complied will all arrangments, it was the bank that litterally lied to the other bank and us.

Answer
Dear Eric,

It all depends on whether you have removed all your contingencies. If all your contingencies have been removed by you then your deposit is in jeopardy.  If you have not removed your contingencies then you should get your deposit back. Many times when a loan is approved it has certain conditions.  These conditions may not have been met.  The question everyone needed to ask is whether it was unconditional approval.  Many people get preapproval letters from banks but they don't carry much weight.
Hope this helps and good luck and hopefully you have not yet removed all contingencies.

Sue Bernstein