Bank gives you a letter of credit, proceed on purchase to only be denied. Refund fee

[OneDay]

Bank gives you a letter of credit, you proceed on purchase to only be denied by FHA as the bank failed to research your foreclosure properly and used your BK discharge date as eligible date.

So we received a letter of credit, paid all the fees and the $500 appraisal fee.

Only to be denied a FHA loan as our previous foreclosure discharge is 6 months after our BK date. The home we hoped to purchase is bank owned, they will extend our contract 60 days. Our lender is looking for an alternate financing program which is a shot in the dark.

Question is this.
-If we cannot purchase this home will the bank refund our appraisal fee's we paid?
They gave us the letter of credit so we believed to be purchasing the home. Had we known there was the possibility of being denied then we would not have paid for the $500 appraisal unless we knew for sure.

We will know for sure on the alternative program by Wednesday hopefully.
Anyone have this happen? How did it turn out?

[Ugh07]

-If the appraisal has been done then they will likely not refund the money. It really depends on that Banks particular policy.

-Unfortunately your situation is pretty common, lots of Loan Officers are not as knowledgeable as they should be, send out your pre-approval and then once an underwriter actually gets the file it is denied.

[OneDay]

I still think the bank should be able to check your FHA status prior to submitting the loan? I feel they should be able to make a phone call and verify this such thing and not waste peoples time and money.

There is some inconsistency with the bankers story, which is making me very curious as to why the story has changed.
-First she said the underwriter found our FHA foreclosure discharge date as 8/24/08, so we cannot use the FHA program.
-She said the same underwriter will review our application on the Ameridream program, which we need an exception for our income being $4500 over the program cap.
-When I asked if the underwriter actually speaks to someone in the FHA to get the foreclosure date, she said the loan did not make it to underwriting only to a processor.
-Yet she still says the same underwriter will review our loan so it should be a quick process.

Talk about bouncing around.

[Ugh07]

Many banks have a 2 tiered system for underwriting; a jr underwriter will clear easy conditions, this person could be called Processor, Account Manager, jr Underwriter. then a Sr underwriter to clear more comprehensive or complex conditions. The SR underwriter is the only one with her DE and has to sign off on the file as good.

[SunshineGal]

With FHA the appraisal stays with the property, so if someone else buys the house within the next 6 months you may get your appraisal fee back. To be honest, I can't remember how that works, just that you need an FHA case number to order the appraisal and then if one has already been completed you have to use the existing one.