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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 126960  
Subject: Re: Chase no longer issues commitment letters? Date: 7/5/2013 3:54 PM
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I understand that commitment letter is truly binding, my question is whether anyone has heard that Chase has stopped issuing these letters.

I don't think it's so much an issue of Chase no longer issuing these letters, as much of a question about whether they actually ever issued them as 'truly binding' commitments. My experience tends to parallel Dave's in that I have never seen any bank (not just Chase) issue a full 'commitment' letter that irrevocably binds the bank to lending the money. There are always some conditions that must be met, such as 'no change in employment status' or 'no change in credit rating' or 'loan amount must be no more than 80% of property appraisal'.

Because of new regulations, it may be that Chase is more explicitly spelling out these conditions than they used to, which may give the appearance to someone who is used to the 'old' style of commitment letter that the 'commitment' is less 'committed' than it used to be. However, even under the old process, if, for instance, the purchaser got laid off the day before the closing, the bank would not lend the money, even if they hadn't specified 'the purchaser must remain employed' in their 'commitment' letter, because that condition was contained somewhere else in the fine print of qualifying for the loan, and the 'commitment' letter generally had some generic statement about 'all other conditions of the loan must be satisfied'.

That said, I've never been involved with any co-op real estate purchases, so I have no idea if there was some higher level of 'commitment' letter that is provided for those transactions.

Do you still have your paperwork from when you purchased the co-op? If so, take a look at your 'commitment' letter and see if there is any 'out' for the lender.

AJ
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