Home buyer's money in limbo after bank closure




Posted on April 26, 2010 at 11:27 PM

After years of apartment living and watching the drama of Dr. Phil, Justin Running and his girlfriend, Jaimee, decided to make a move into their first home.

Justin jumped on the $249,000 price tag and put up $1,500 dollars in earnest money to City Bank of Lynnwood. Everything was signed and ready to go, but the deal was really heading right down the tubes.

"I got an e-mail on my phone. I looked at it. 'City Bank shut down,'" said Justin.

Days from their closing, Lynwood's City Bank was shuttered by state regulators.

"We were really close had some of our stuff packed, just getting ready to move in," said Justin.

Whidbey Island Bank assumed all of City Banks' deposits and some assets. The rest, including Justin's home financing, were picked up by the FDIC. He was told the deal, including the earnest money, were gone for good.

"We were just set on this place," said Justin.
Justin called me to see if he could get his $1,500 back. We spoke with Brad Williamson from the Department of Financial Institutions. He's the top state regulator for Washington banks.

"If you signed a contract with a bank for the loan the FDIC doesn't necessarily have to perform on that contract because the closure severs all contracts," said Williamson.

With the earnest money in limbo, Brad let the FDIC know about Justin's problem. Shortly after, Justin asked us to stop by his apartment where he got some good news.

"We got a call from the FDIC and they're going to give us our money back that we lost. We're pretty excited about that," said Justin.

There have been five bank closings this year alone. If your bank is shut down and you're in the middle of a deal, you need to call the feds right away so your name will be at the top of their list if or when refunds are made.

Contact the FDIC at 1-800-881-7816.