Asked and AnsweredThe commitment letter included a condition that my loan was subject to a “second review” by the investor to whom the loan will be sold. Has my commitment letter been issued?
Not yet. Although the bank or your mortgage broker has produced a document called a “loan commitment letter”, whether you actually have an agreement from the bank to underwrite loan depends upon the significance of the “conditions” that have to be satisfied as stated in the loan commitment letter. If the loan is subject to a “second review” by an investor or by a higher level of underwriting, until that second review is over, the bank can withdraw its underwriting and initial loan approval and leave the buyer high and dry. When a commitment letter is issued for the first time, the conditions must be reviewed carefully to insure that the buyer can satisfy all of the conditions in a timely manner. When banks include a “back door” out of the lending process, buyers must be extremely cautious about relying on that document as a binding commitment to provide the financing.