The Daily Star says the Hammers according to reports in Spain had agreed a â‚¬2m fee with the Spanish side last week, with Loe, 24, set to undergo a medical after travelling to London.
But having been successful in bringing in AC Milan midfielder Antonio Nocerino on a loan deal until the end of the season, West Ham pulled the plug on the proposed transfer of Loe much to the anger of Osasuna technical secretary Petar Vasiljevic.
"Osasuna received an offer from West Ham for Loe and we reached an agreement, which was just pending on the player passing his medical," he said.
"Prior to his trip to London with his representative, we had already agreed everything between Osasuna and West Ham via email.
"Loe travelled on Friday, because on the Saturday he would pass his medical.
"Then on Saturday, they started delaying the medical tests in London, while in Pamplona we received an email in which they told us the matter with Loe was now closed, because they had opted for another player instead, saying sorry and that's all."
For breaking stories and all the great banter like us on Facebook: facebook.com/tribalfootball