Expert: Jessica Bryan - 2/17/2009

Question
I put down $18,000 deposit for a house, the check was made to an escrow company.  My lender who originally pre-approved my loan for the house is now determining not to lend me. Will I be able to get my escrow deposit back because my lender changes their mind?  We just finished the inspection and appraisal, our deadline to remove all contingencies is 02/20/09.

Answer
Hello;
Since you do not qualify for the loan any longer, (and assuming it is not because of something that you did to disqualify yourself) you should be able to get the deposit back.  The contract usually includes under what conditions you can obtain a full deposit refund.  However, if there are certain conditions that were not met by you at the lender's request or if they approved a rate and you simply don't want to go that high, then you will not be eligible for the refund.  My suggestion is to talk directly with the escrow officer or your real estate agent if you are being represented and determine if you can get the check back.  Then, you will need to sign a cancellation amendment or notice requesting your deposit.  Let the escrow officer know that you want to do this if you are representing yourselves and he/she will take care of the paperwork.  Don't forget first and foremost to let the Seller know (or the Seller's agent) so they can authorize the return of the deposit.  In addition you might offer the seller a copy of the inspection report as a good-will gesture or ask if they would like to split the cost.  Another option is to let the Seller know that when the home is under contract to another buyer that they (the Buyers)can contact you to get a copy of the inspection and when they do, you can split the fee for the report with them.  The same might be true of the appraisal report.  I am not saying that the bank will accept the work of another appraiser but if it is very recent they might.

Best wishes,
Jessica Bryan