I had a commitment letter signed and agreed upon for our first home with 100% financing and with a month to go until closing I get a phone call from the mortgage company that something happened yesterday with the market that In turn will now require me to come up with a 3% down payment. Is this Legal? If I already had a commitment letter send and agreed upon should they not honor it?

I am not a lender, but I did speak with mine yesterday as well (regarding a personal question) they told me the same thing, that on Monday major changes took effect regarding 100% financing. I think they have to honor it only if your loan is actually in progress, then again as an agent I see it happen EVERY DAY-deal falls out because the "loan program buyer was using is no longer available". You could have some contingencies in your buyers contract that may protect your earnest money-you should consult your agent ASAP.

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Sounds like they changed it to FHA. But on FHA you can still do 100% with Down Payment Assistance. The Seller can pay the 3%

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Underwriters supply the money and they make the rules. I had one last summer where the underwriter demanded an additional 5% on top of the 10% the buyer was already putting down.

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No, this Is no FHA It Is a conventional 30 year fixed.

I actually had the money for the down payment but I had an original lease with the apartment I am renting through until October, when I found out I was approved for 100% and the agreement was signed (not to mention I loved the house) I spoke to my Landlord and we came up with a buyout on the lease that Is already done! I am supposed to be out by the end May 1st. I am freaking out! I can't believe that something like this a little under a month from closing can happen. Had I known i needed more money I would have figured out another way to get out of my lease. The money i paid to the landlord for the buyout could have been used for my down payment.

I was told not to get too panicked yet because there still may be a way for the mortgage company to follow through on this and I should hear something on this today but I was just curious If they can even go back on their original agreement or not. If this falls through my children will be devastated.

My bet is they can't get any PMI for their 100% loan program any longer. The big PMI companies made some major changes that went into effect on the 15th.

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Benjamin Dona, Broker/Owner
Gulf Coast Associates, Realtors
Metro Mortgage Company
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Exactly! This is what I have been told. Now they are In a scramble trying to find a company that will honor the original loan. I was told I would hear something yesterday but nothing as of yet. I am hoping to find something out this afternoon.

Loans programs can change at any time and even though they promissed a loan based on whatever criteria you both agreed on, it can be discontinued. This has happened to me a number of times with different clients and I had to scramble to find them a different loan with different lenders. It is going to be the norm for awhile so you will need to be prepared and have a backup plan up until closing

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Well, there was no getting around it.... I had to put down 3% and now the contract has gone through underwriting and everything Is done. Although I was planning on not using this money because I was looking to build a nice amount In the bank In case anything went wrong once In my home I had to do it. I have been promised by both my agent and mortgage handler that this was final and there would be no other pop ups with the contract at the last minute. I am glad I had this money but I was told many other deals fell through because other buyers did not have the money. I feel bad for those families.

Unfortunately banks have the power to change the plan at any time. There are no rules or laws that stipulate a bank changing the criteria until the loan closes. It's their money and they are being very precautious these days. If they were like this the past 3 years, we wouldn't be in this position.

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