Grand Rapids Realty

Family on verge of homelessness after Bank of America denies loan in 11th hour

Update: Family won't face homelessness after landlords step into help and another Bank of America customer says he had a similar experience.

GRAND RAPIDS — Instead of moving into her dream house this weekend, Jane VanOstenberg-Smith might be homeless after Bank of America denied her nearly $70,000 loan in the eleventh hour.

Just last week, the Grand Rapids single mother of two had been told everything was a go on the loan for the modest three-bedroom house in Alger Heights. So she gave notice to her landlord, changed her address and her boys’ fall schoolbus route and spent nearly $500 on a washing machine and dryer.

But the loan deal fell apart less than a day before Friday’s scheduled closing.

“It’s just wrong,” said VanOstenberg-Smith, 41, who was in tears Thursday after receiving the news. “What they are using to deny me in the very last hour of the very last day is the same information they had six weeks ago when they pre-approved my loan.”

VanOstenberg-Smith’s experience is a cautionary tale that loan applications are never a sure thing until final approval. And lenders are scrutinizing applications more closely than ever as the country recovers from the mortgage industry meltdown.

Her real estate agent, Anne Lauten with Keller-Williams Realty , said this was just the second time in her 14-year career that a bank has pulled out at the last moment with a client. She is now scrambling to find another lender for VanOstenberg-Smith.

“We were totally caught off-guard because everything seemed to be moving in a positive direction,” said Lauten, adding she was also told by a Bank of America loan officer to proceed with setting up the closing.

“Bank of America has left this family in a predictament,” said Lauten. “You don’t wait until the last minute, pull the plug and say we can’t help you.”

The lending giant is looking into the situation, said a Bank of America spokeswoman.

“It’s unfortunate that she received the news at a late hour and we are researching what transpired and what we can do to improve service moving forward,” said spokeswoman Jumana Bauwens. “We are very sympathetic to our customers’ situations but as a responsible lender, we want to make sure our customers can afford their loans now and in the future.”

The bank’s and the industry underwriting guidelines are much more conservative now than they were five years ago, she added.

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