An underwriter has the authority to reject a loan for any reason, with the usual exceptions (race, religion, etc.). If there are no other comps to use in your area it sounds like they are having a hard time justifying the value of the house, which in turn leads to them turning down your offer. If they have to foreclose on your house (I’m not saying that will happen) they have to be able to justify being able to re-sell your house and get their money back. Some lenders view things differently, however, and you may have to shop your loan somewhere else. As far as your closing date, if you had a closing on the house set up then your loan should have already been approved and been through underwriting. So if the loan was never approved you should have never had a closing date set up for the house.

No – you don’t have a case.

The underwriter is looking at the viability of the loan in the situation that the property has to sold. If you have million dollar home in a $100K location that home is not going to be worth a million dollars because million dollar people want million dollar locations – not $100K locations.

The mortgage market is extremely lend-tight right no because of the tens of thousands of people in default because they over extended themselves with variable interest rate loans.

I wonder if the underwriter has been waiting on additional comparables to be provided by the appraiser and either did not receive any or the ones received were not acceptable. An underwriter can decline a loan if the appraiser is showing an inflated value without showing homes to support the value. If there are not any houses selling for near the same price, sounds like the seller is are asking too much? If everyone in your party disagrees with that, they need to provide comprable sales to the underwriter that are acceptable. The comp needs to be similar to the house you are trying to buy. It can’t be a larger home on the other side of the railroad tracks for example. Why then won’t the seller’s come down on their asking price if there clearly aren’t any homes in that area selling for near that price? A credit report is good for either 60 or 90 days, so credit will have to be repulled if your loan goes past that date. I am wondering more if and or why not additional home comparables were not submitted to the underwriter and if there aren’t any available, why the seller’s aren’t lowering their price. Keep in mind that this is why an appraisal is good to get so you know whether you’ll be paying too much for the house. Is there anyway you can extend your apartment lease? So sorry to hear about your situation.

Nothing to do with location; everything to do with the loan amount being too much for the amount of purchase. If there were a more substantial DP, it would be less of a problem.

Illegal. No

This is an increasingly common problem, due to the rapid meltdown in RE prices & tightening of lending standards. No one here can tell you you “have a case,” because no one here knows all the facts or has read the loan commitment — if there was one.

How can any of us help you any more then your own broker or other aides?

If they say you have a lawsuit, then who do you think is going to be better able to assist you, a lawyer that they will be able to recommend, or someone random like me on yahoo?

If time is of the essence, then ask all three for a reference to a lawyer, and call that lawyer RIGHT AWAY.

It may be that a letter for a lawyer explaining the situation may be able to restore the loan when they see the error of their ways, and to reimburse you whatever costs you incurred as a result of their error.

If they push back, you are going to have to consider other living options, because it will take a wil to get to court and get resolved.

No,

They look at it as if they have to foreclose they will never get their money back out of the house. It happens all the time. This is for the US.

Start looking at a new mortgage broker.