Has anyone ever heard of a mortgage lender declining a loan because the home has geo thermal ?

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Three days before closing on our property, the lender decided that they would decline the loan as they noticed in the appraisal (that they had possession of for 5 weeks) that the home has geo-thermal. Our real estate agent and mortgage broker were both surprised by this. Has anyone else had this experience?

6 Comments
  1. Reply
    libaki
    April 30, 2011 at 12:26 am

    Odd, I would have thought a geothermal system would be an assett.

  2. Reply
    wizjp
    April 30, 2011 at 1:23 am

    Never seen one as an underwriting exception.

  3. Reply
    newjerseyguy
    April 30, 2011 at 1:27 am

    Do you mean a geothermal heating system? Probably, some underwriter decided it is unconventional and therefore could be risky. Underwriters do weird things sometimes.

  4. Reply
    Ross
    April 30, 2011 at 1:58 am

    no thats a first for me….outrageous…..i would demand to know why from your lender espeically in these times for greater need for energy efficent homes..All I can think of is that they can give problems in houses that mayhave subsidence issues..but Im sure that would have been ruled out even so if anything went wrong insurance wold cover it. Id threaten to go to the media about this one!!

  5. Reply
    glenn
    April 30, 2011 at 2:08 am

    I wrote a contract on an underground house a couple of years ago and could not find anyone willing to make a low down payment loan. The mortgage companies kept demanding the appraisal include current sales that were nearby and were also underground. We could not find any. The buyer finally decided that it would be hard to ever resale the home so they backed out.

    So if this system is new to your area or if their have not been many sell recently then that could be your problem (especially if you are trying to put a very small amount down).

  6. Reply
    godged
    April 30, 2011 at 2:23 am

    Geothermal heat is common in my area and I have never heard of this. Most lenders will allow exceptions to their rules if something is typical for an area, such as this circumstance.

    Try somewhere else.

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