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Denying loan before closing?

So my dad just retired and applied for a loan. They gave us 220k and we searched for 2 months. Today [9/29] is our closing day. Last night the loan officer contacted my dad and told him unless we sell a car our loan would be denied. Why would they wait the day before closing to suddenly change their mind?

They said my parents debt to income is too high since we have been unable to sell the current house we are living in. We already put down 10k to secure the house so that we could get it. The officer said that before we sell one of the cars we have to contact them. After it sells we have to show them a title of the car being transferred, the amount we got, and then all income in our accounts.

My father asked if it falls through what happens to our 10k we put down. The lender said that it wasn't their problem and we would have to talk to the seller to get the money back. They also said b/c they were with us this long that we would have to pay them for their services even though the loan can be denied.

Is this even allowed?

submitted by /u/Andelsky
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source https://www.reddit.com/r/RealEstate/comments/16v7qox/denying_loan_before_closing/
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