When it goes wrong
The lender backed out before closing
Whether you can recover your deposit and fees, how to salvage the closing, and how to tell an ordinary re-trade from something worse.
Short answer
Move on two tracks at once: find a replacement lender today, and separately work out what you can recover. Do not let the second delay the first — the contract deadline will not wait.
Work out which of these it is
- A re-trade
- They will still lend, but on worse terms — lower leverage, more points, a higher rate — usually after a valuation came in low. Annoying, common, and negotiable. Get the revised terms in writing and price them properly before accepting.
- A genuine decline
- The appraisal, title, or your file killed it. Ask specifically what, in writing. You need to know before the next lender orders the same reports.
- A capital problem at the lender
- Their funding fell through. They will rarely say this plainly. A tell is vagueness about reasons combined with repeated short delays.
- Something that was never real
- If money was requested up front, by wire, to the lender rather than to a licensed title or escrow company — and now the loan has evaporated — you may be looking at advance-fee fraud rather than a failed loan. What to do next.
What you can usually recover, and what you cannot
| What you paid | Recoverable? |
|---|---|
| Appraisal / valuation | Rarely — the work was done. Ask for the report itself, which you may be able to reuse. |
| Underwriting fee marked non-refundable | Usually not, though worth asking |
| Application deposit | Depends entirely on what you signed |
| Anything held at title or escrow | Yes — it is not the lender's money |
| Money wired directly to the lender | This is the one that is often gone. See below. |
Saving the closing
- Ask the seller for an extension immediately. Most will grant one; some will want a fee or a non-refundable deposit. Get it in writing today.
- Call three lenders, not one. Explain plainly what happened — "my lender re-traded on a low appraisal" is an ordinary sentence in this business, not a red flag.
- Reuse what you can. Some lenders will accept a recent appraisal or transfer it; title work usually carries over. This can save a week.
- Check whether the deal still works at the new terms. A re-trade sometimes turns a thin deal into a losing one, and walking away from your deposit can be cheaper than closing. Run it through the calculator before you decide.
Before you sign with the replacement
You are now under time pressure, which is exactly when people skip the checks. Do them anyway — they take twenty minutes: verify the lender, and ask the nine term-sheet questions in writing. A second failed closing is far worse than a one-day delay.