Do I have a remedy if I was misinformed of the status of a loan application?

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Do I have a remedy if I was misinformed of the status of a loan application?

I applied for a loan with a large bank. Called back the next day to check status, was told I was declined. When I asked why, I was transferred to someone who tried to sell me ID Theft protection. When I asked to be transferred back, I spoke with 2 people, neither of whom could find an application under my name. I was told they’d research but was not called back. When I called back, I was told that I should reapply. I did so and was declined, with reasons given that do not seem to match actual circumstances (e.g. poor performance of accounts with lender. Don’t have those specified.

Asked on April 20, 2011 under Bankruptcy Law, Iowa

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Banks are generally under no obligation to loan anyone. The absence of an obligation means that they are almost always not liable for not loaning or botching a loan--there is usually no liability without a duty or obligation.

The exceptions: banks can't discriminate in lending (e.g. against a race), so if you feel the reason for the denial was some form of illegal discrimination, you may have a case.

If in reasonable reliance on bank representations that you *would* get the loan, you took certain actions (e.g. bought things, ordered inventory for a business, etc.) which you would not have done but for the bank's representations, you *might* be able to establish a cause of action under the theory of "promissory estoppel"--that because you relied on a reasonable (it MUST be reasonable to have relied on it) promise, the bank can no longer renege on that promise.


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