If I lost my $2,500 earnest money because the bankdid not give a final loan approval for closing but Iwas already pre-approved, canit be held responsible?

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If I lost my $2,500 earnest money because the bankdid not give a final loan approval for closing but Iwas already pre-approved, canit be held responsible?

Asked on February 10, 2012 under Real Estate Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

No, unfortunately the bank cannot be held responsible. "Pre-approval" is a misnomer--it does *not* obligate the bank to go through with the loan. Rather, it is merely a statement that if everything you represent is true, you should be eligible for a loan up to certain amount. However, banks do not commit to loans until after they do the underwriting. Until they finish with the underwriting process, there is no commitment, and hence no duty to provide a loan. Without a duty, there is no liability.


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