That's really not ok. Was the apraisal ordered? If so, that really messes things up. I would try to determine why they are doing this. Buyers often chase lower rates...perhaps they can get a lower rate with the same lender. In any event, I would certainy try to discourage this in all ways ethically possible!

First I would ask Why.

Don't.

"Please sign this disclosure saying that you are changing loan companies, effective this date.  Please remember the clause in the purchase agreement that says you will be in default if settlement is delayed because you changed lenders. When will your new lender be ready to close?"

First of all, unless they can still close on time, they become in default of the contract.  That would be the first question and then asking why they are changing.  Is there a reaon that is justified.  Then...it is talking to the sellers ...

I suspect that answer may change from state to state.  Here in Arizona buyers can change lenders until we order the appraisal, even after that they could but it will cost them another appraisal plus unless we have a long COE date, we will not close on time.   When asked, I recommend local lenders I have worked with before, as they have earned my trust, they take care of the client and we close on time.   Some buyers will still pick a fly by night on-line company I have never heard of before, promising some low interest rate.  With those buyers, when they decide to switch, I silently cheer inside.

It's there right to switch in most cases. There is languange in our contracts addressing that.

Obviously depends on whether the new lender can perform within contract deadlines. I'd want to know why they are switching lenders. I've had this happen with no negative implications.

William Feela - this is a difficult situation. One thing I let my buyers know that 'Time is of Essence'. If the new lender can't close in time, they risk the deposit - unless seller grants the extension.

We do have an addendum for that William, it seems we have one for everything.

I tell that them it is alright if we can still close on schedule, and I would call the new loan office to se if that would be possible.

Case has been assign, I would tell them to reconsider.