This is a good question, but one that is very important. Your lender is required to gather relevant information and inform you if your mortgage was rejected within 30 days. In this time, the lender must do several things.

  • First, they must check your credit history.
  • Second, they must check your income.
  • Third, they must appraise the value of the property you want to buy.
  • And finally, they need to assess the stability of your income and of your employer’s business.

This is to make sure that you will continue to make as much as you are making now, and is a good way for the lender to be extra-sure of your financial situation before they lend you the money. 

If the lender fails to give you an answer within 30 days of application, then you might have grounds for legal action. Under the FTC’sFair Credit Reporting Act” (FCRA) you are somewhat protected. The FCRA promotes the accuracy and privacy of information in consumer credit reports.

This is what the law says in regards to denied credit.

If your credit application is turned down because of an error on your report, the lender is required to provide you with the name and address of the credit bureau that issued the report. Then, you have 30 days to request a free copy from the bureau. The bureaus must disclose to you all information in the report, its source, and who has recently received the report.

You have the right to have the credit bureau re-issue corrected reports to lenders who received reports within the last six months, or to employers who received one in the past two years.

You should contact a lawyer, and find out how to proceed.

There are also some other things to remember in this situation. The lender is required to provide you with a letter stating exact reasons as to why your mortgage was denied. If they simply tell you that “you failed to meet our minimum requirements”, then you should know that this is not a good enough answer. They need to give you specifics… answers like “your credit was not good enough”, or “ your salary was too low” are more specific and are better examples of answers you should obtain.

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.