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[vangace]

Once again i turn to GAF for help.

Here is the situatioin, my brother and his wife are or were close to buying a house here in LA. They were actually a few days from escrow being closed but my bro lost his job during that time and mortgage pulled from the deal saying that during their credit evaluation, my brothers' job weighed heavily in their decision to approve the loan but now that he has lost job they were pulling the loan. Mind you, my bro has an MBA and it won't take him long to get another job.

The reason why this is bothering me so much is that by withdrawing the loan, my brother loses the $8000 deposit. Is it legal for a bank to do this? Because it seems pointless to use current occupation as deciding factor, shouldn't they use "earning potential" since in my bro situation he will find a job that might actual pay him more than his previous job.

 

[Deleted member 4784]

The answer to this question depends on the agreement. There is no way for anyone here to know whether your brother is entitled to a return on the deposit without first knowing what he agreed to upon making that deposit.

My best guess without knowing the details of the agreement would be that your brother is not entitled to a return on the deposit. Although it is unfortunate that your brother lost his job, he did breach the contract by not delivering on the loan, which was just as unfortunate for the realtors and other parties involved in selling the house. That $8000 will likely go to reimbursing them for their time.

However, it is important to note that this is purely guesswork on my or anyone else's part without being privilege to the details of the agreement itself. The only person with enough details to answer this question is your brother.

I'm sorry to hear about your brother losing both his job and his chance at getting the house. Hopefully he will be able to find a better paying job with that MBA and qualify to afford an even better home. Good luck!

 

[Musashi Wins!]

They won't return a deposit?!? This is the earnest money he put down when he signed the contract? That's awful, I'd fight for that.

You can definitely lose your mortgage due to changes in your work status and credit. It's unfortunate but it happens.

 

[teruterubozu]

There are instances when the sellers of the property will return the deposit out of goodwill, especially if they are not in a hurry to sell. However, it is very rare and more than likely the sellers will claim that they were inconvenienced.

 

[Musashi Wins!]

There are instances when the sellers of the property will return the deposit out of goodwill, especially if they are not in a hurry to sell. However, it is very rare and more than likely the sellers will claim that they were inconvenienced.

Yikes, I've never had a single deal where the sellers or their agents wouldn't return it. Assuming realtors were involved here. Though I can certainly appreciate that there are inconveniences involved when a deal falls apart and the sellers have been passing on other buyers, etc.

 

[teruterubozu]

It's a very sensitive situation. The sellers may have quit their job for the move, put a down payment on a new house, bought airline tickets, passed on potential buyers, spent money on repairs during escrow, etc., etc. In those situations, more than likely the seller will keep the deposit for their loss.