Can I sue my MORTGAGE COMPANY after 203k fiasco?

In Oct 08 we purchased our first home--a foreclosure--with a 203k Rehab Loan. Once the work was completed, the 203k should have been closed out, we were to receive final disimbursement and the 203k was supposed to have been streamlined into a conventional FHA loan within 30 days (although HUD's website states 35 days by law). However it was FIVE MONTHS before we received final disimbursement... 3 months after that, that I received a phone call from an attorney telling me to bring 3k to his office----the bank was finally ready to streamline the mortgage. I refused on principal. I had been hounding them to take action for 8 months and all I got was repeated "thank you for patience" emails from the underwriter BUT technically my patience was really me overpaying... and if you calculated it back 8 mos then the mortgage company OWED me 1,900 more than lawyer was asking me for.

In the meantime, in order to continue paying the inflaited mortgage payment we stopped paying all of our credit cards--a roof over our heads comes first--and NOW the mortgage company is refusing to streamline because of our bad credit.

If everything would have gone as planned [and on our end it did... work was completed in less than 3 mos] and the mortgage company had closed out the 203k within the 30 days they were supposed to, we would have had no problems making our mortgage payment AND our credit card payments.

Do you have cause to bring this to litigation since they breached the contract, according to HUD broke the law, and both my husband and my credit is now trashed (a drop of over 300 points)? Could the mortgage company be held responsible for ruining our credit?

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  • 10 years ago
    Best Answer

    Since it appears based on your description the mortgage company violated federal statutes I think you may have valid grounds for a suit here. That said, you will need a lawyer who is well versed in this area to contest the matter, as the laws surrounding FHA and HUD are VERY complex. But it would definitely be worth exploring and probable that if your case is this strong the lawyer might work on contingency.

  • 10 years ago

    Oh my goodness you need a lawyer, not the nonsense you get on Yahoo Answers! Call one now!

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