After closing on a refinance, can a lender ask for additional documentation before they will fundthle the loan?

UPDATED: Sep 30, 2022

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After closing on a refinance, can a lender ask for additional documentation before they will fundthle the loan?

I recently closed on a refinance and now the lender is refusing to fund the loan without tax transcripts.

Asked on September 1, 2016 under Real Estate Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

If you actually closed, they are obligated to disburse the funds unless they came across information or reason to believe you committed fraud, such as by misrepresenting your income (which may explain why they want the tax transcripts). Or rather: if they refuse to release the funds, you can bring a legal action on an "emergent" basis (think: "urgent" or "emergency") to get into court in a week or two to force them to disburse the funds (though doing this can be procedurally tricky; you'd want to hire an attorney to help you), but they could then allege fraud (which voids contracts, including loans) as a defense. If they could make out a reasonable case that fraud, or something like fraud, is going on (e.g. some other irregularity in your application, etc.), it is most likely that a court would let them delay disbursing the funds until that issue is resolved.

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