Can a lending institution back out of a signed contract due to a drop in your credit score?

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Can a lending institution back out of a signed contract due to a drop in your credit score?

We have a signed contract with a bank to finance a manufactured home. One of their stipulations was that a loan that we have be paid off. The dealer we are working with agreed to pay of the other loan. The day that he was going to pay the loan off, he called the bank to make sure everything else was in order and was told that they are no longer willing to lend the money due to a drop in our credit score.

Asked on July 27, 2012 under Real Estate Law, Ohio

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Please take the signed contract to an attorney to review on your behalf.  It is very common these days for lenders to add clauses giving them a back door or loop hole to cancel the transaction in such instances.  Good luck. 


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