Legal Question in Real Estate Law in California

Re: Can a mortgage company back out of a refinance if all paper work has been si

Nothing in the facts you present shows that the lender made a commitment to lend. Qualifying does not amount to a commitment, nor does your filling out of all the forms, signing and notarizing, etc. A mortgage lender is more or less 'on the hook' only upon their issuing to you a commitment letter, which may be titled as such or simply contain language expressing a commitment to lend.

Even then, these commitment letters are likely to contain escape clauses making funding 'subject to' one or more conditions, such as their confirming appraisal, title insurance, readiness of the parties to close by a date certain, and on and on.

In the current environment, rates are low and lenders seem to be eager to do business. It would be surprising to find an institutional lender like a bank backing out of a deal without good reason. On the other hand, if you were planning to borrow from an individual or other 'amateur' trust deed investor, they may have decided to back out for any of a number of reasons, perhaps good like a weak appraisal of your property, perhaps bad like the stock market nosedived or they got cold feet for the deal.

If you can't find another lender in today's market offering as good or better terms, perhaps you should question the intended deal.

My experience with bad-faith suits against lenders is that they are very difficult to win.