When Lenders Fail in the Final Hour | Monday Morning Musing #7

Over the past three years, I have twice experienced the immense frustration and distress of being let down by a lender at the final hour.

On both occasions, after completing valuation, legal checks, and underwriting, the lender decided on the very day of completion not to fund the loan. In the world of property and finance, setbacks are inevitable, but being abandoned in such an extreme manner is rare and unacceptable.

The most recent incident, which occurred just last week, is particularly egregious. The lender suddenly claimed to have identified an issue in the valuation report. Whether their concern was valid is debatable, but what is indisputable is that they had possession of the report since November 8th of last year. Had they raised this issue in November, we could have resolved it or secured alternative financing.

Their failure to act sooner is, in my view, borderline criminal. This is not just negligence, it is a blatant disregard for the borrower’s well being and interests. There is no excuse for it.

To make matters worse, the borrower had already exchanged contracts, reassured by the lender’s claim that only two minor legal points remained before closing. We all believed completion was a mere formality. However, the lender only reviewed the valuation report within the past two weeks and made their devastating decision last Friday. Now, we are in a race against time to find a solution.

As brokers, we act as an essential bridge between lenders and borrowers. We need both parties to work together with cooperation and integrity. Unfortunately, we sometimes encounter a troubling lack of knowledge, empathy, or accountability from either side. It is our role to guide the way forward, but trust in a process must be upheld by all involved.

When trust is broken, the consequences are painful. Mistakes like these should never happen, and we must collectively strive to do better. Our reputations depend on it.

While I have named and shamed lenders in the past, it is never something I do lightly or with pride. My hope is that this lender will step up, take responsibility, and work with us to ensure our client gets what they need in time.

I remain, as always, an optimist. My focus is on solutions, and I will do everything in my power to get our client across the finish line.

‍

If you're working on a project and are in need of funding solutions, please get in touch.