If you are purchasing a home for 53K and the appraised value is 69K why would the bank be asking for the deed to another property owned free and clear?

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If you are purchasing a home for 53K and the appraised value is 69K why would the bank be asking for the deed to another property owned free and clear?

My mother in law is purchasing a home through auction. She won the auction for
55K and put 5K non refundable down. The home just appraised at 69K. They are
only wanting to loan her 49.9K AND they want the deed to another home of hers
that is free and clear. Their reason was that if something happened to her and
one of the kids wanted the newly purchased property they would need that. No they
don’t The home would have the bank as the leinholder so therefore, the home
would have to be sold, loan paid off, then the proceeds split between the adult
children. How can they do this? There is no legal means I do not believe and can
they refuse to give her the loan if she doesn’t give it to them. This just makes
no sense to me at all

Asked on December 19, 2016 under Real Estate Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The short answer is, there is NO right to get a loan: banks and other lenders decide whom they want to loan, when, for how much, and the terms of the loan, and are free to decline to make a loan if, for any reason, they consider a bad deal or bad risk...or they can put any restrictions or requirements on the loan they want. So the reason "why" they want to do this does not matter: they have the right to do it. They can set the terms of the loan, and cannot be forced to loan other than under the terms with which they are comfortable.


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