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Real-estate professionals raise complaints about CHFA/PMI disclosure and 'bait-and-switch' financing

Consumer Protection Department Committee ยท November 5, 2025

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Summary

Members and staff discussed complaints that lenders or agents are omitting CHFA designation on prequalification letters or MLS forms, listing loans as 'conventional' or 'PMI' and later delivering CHFA-related commitments with additional conditions. Members characterized the practice as a "bait-and-switch" that can put sellers' deposits at risk.

Real-estate professionals and committee members described a pattern of transactions in which CHFA-linked loans (loans guaranteed through CHFA programs) appear on forms or preapproval letters as "conventional" or simply "PMI," leading buyers and sellers to believe the deal is conventional until later stipulations tied to CHFA underwriting emerge.

"I get a conventional thinking and I ask, is this commit? Yes," a committee member said when recounting a transaction. The member added, "After the fact... it's a bait and switch. I get a conventional thinking and I ask, is this commit? Yes." Members warned that when financing switches or is revealed after contract signing, a buyer's deposit can become at risk and the seller can be harmed by delay or deal collapse.

Several members suggested the issue partly reflects disclosure gaps by buyer agents and lenders. One member summarized: sellers are not always asked or informed if a buyer changes financing type after contract execution, and that scenario can jeopardize the sale. The discussion identified Dime Bank as one example cited by a participant; members agreed the practice may vary among lenders and could be more common with larger, nonlocal banks.

The committee did not adopt a formal enforcement action during the meeting; members asked staff to look into the matter and monitor whether the practice is widespread.