Asked and AnsweredMy co-op contract included the seller’s flat screen, but the bank underwriter required that it be removed from the contract as it was “impacting” loan to value. Can the bank do that?
Yes. Residential financing is chaotic at the moment and will remain so for the foreseeable future. No matter what the borrower is told at application or if a so called “pre-approval” or “pre-qualification” letter has been issued, the loan will be subjected to the bank’s underwriting procedures. Until the loan comes out of underwriting, all bets are off. If the underwriter requires additional documentation or changes to the structure of the deal (like removing a flat screen, as silly as that is), the borrower does not have much choice other than to comply. The favorite refrain of the loan officer or mortgage broker when there is a Dr. Evil-like request from the underwriter is usually “just do what they want!” Although high-end purchasers can avoid underwriting delays through the private banking divisions of lenders, most borrowers should be prepared for the underwriting process to take 30 to 60 days, and perhaps longer, when a borrower has credit problems. For more on residential lending, see “Banks Get Funky.”