Yesterday, LoanCity closed with no advanced notice.  Home buyers who had loans approved with them for funding on the next day found that the loan promise will not be honored.  This puts their initial deposit at risk because they may become in default of their purchase contract if they cannot secure funding quickly enough.  For so long, home buyers have not had to pay attention to the solidity of their mortgage lender but that is all changing.  Listing agents will be carefully reviewing pre-approval letters with an eye towards eliminating 100% loans and declining those offers that have a questionable mortgage broker representing the buyer. 

The following is from the LoanCity web site. 

Dear LoanCity Broker:  As many of you may know, LoanCity ceases funding loans at the end of day, Mar 20, 2007. All loans that are not funded by Mar 20 will have to be taken elsewhere to close. Because we appreciated your business, we are pleased to offer you an option to have your loan funded elsewhere – our friends at CMG Mortgage will handle all active loans in the LoanCity pipeline, which are currently scheduled to fund later than Mar 20, as these loans can be underwritten, relocked and funded by CMG Mortgage in an expedited manner. In an effort to expedite the transition of your LoanCity pipeline, below is a contact list of regional CMG Mortgage Managers that you can contact to facilitate the transfer and funding of your current deals in LoanCity’s pipeline.    

Fed Holds Rate Steady Again, As Expected