Pressure to Waive Financing? What You Should Do: Practice Tip

Real estate professionals often ask why mortgage professionals seem reluctant to provide them with a letter confirming that their clients’ financing conditions have been met and they can waive conditions. They are reluctant for good reason.

Typical Scenario

Mortgage professionals communicate the terms of the buyers’ commitment specifically when the borrower has satisfied the lender’s conditions. This happens when the lender is prepared to disburse the funds to close the purchase transaction, but only if the borrower’s situation remains unchanged between final approval and the funding date.

Mortgage professionals should let the buyer know it is the buyers’ responsibility to maintain their income and debt levels at what they were during initial approval of the loan funding. Even then, a borrower’s situation can change without the knowledge of the mortgage broker, making previously approved financing void.

If they provide a letter waiving financing on behalf of the borrower when it hasn’t actually happened, and there’s been an unknown change or some other complication, mortgage professionals could end up on the hook.

Mortgage professionals CAN’T waive conditions

The purchase contract and related conditions are contractual matters between the buyer and seller. The mortgage commitment is between the lender and the borrower. The mortgage broker facilitates lending arrangements for the borrower, but has no legal authority to waive the buyer’s purchase contract financing conditions.

So, as much as the mortgage professional would like to help move the process along as quickly and as efficiently as possible, the responsibility to waive the financing condition lies only with the borrower.