Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
A couple thoughts on rate locks, and if someone legally has to provide you with the promised loan.
First, a rate lock doesn't mean that is the rate you will get. It simply means that the rate has been locked in with the investor for a certain period of time. It also stipulates that all conditions of the loan chosen must be satisfied within guideline parameters.
Now, a rate guarantee is a completely different beast. This is something that is rare in my experience, but some have offered it. If you were given something in writing that guarantees you get a rate, in a given amount of time, then you could have some recourse. It is rare you would ever see this, because so much is also dependent on the borrower providing all information in a timely manner, and in addition having been truthful about all the information used to qualify.
I'm not saying by any means that you didn't do what you were supposed to do regarding time frame, and truthfulness of information. More than likely here is what happened: Inexperienced loan officer missed a key piece of information that put a snag in your loan. It could be something as simple as you having a home equity line of credit that you took a draw on in the last 12 months. Most newbies don't catch things like that, even if they pertain to your loan.
It also could have been something as simple as their lender who the rate was locked with closing their doors. I've personally seen deals get killed right before funding because of a lender going belly up. At this point, the broker can only move quickly and place it with another lender. A lender who 99% of the time wouldn't care about your previous locked in rate. This could be a reason why your rate was to be in the 6's instead of the locked in 6%.
An inexperienced loan officer could have also missed simple rate hits initially, that would change the overall pricing of the loan. A good person would just eat this cost themselves, and consider it a learning experience.
So I guess what I am trying to say is that there could have been a ton of different factors that caused the delay and rate change. They could range from complete incompetence, to a very competent loan officer and procedure, but just ran into really bad luck.
As far as getting any retribution, it's highly unlikely you can personally gain any monetary retribution. All approvals almost always note that the loan is contingent upon key things. The only thing that I think you can do if you want a sense of making them pay for their mistakes, would be going through their states department of real estate with a complaint, or the department of corporations if that is the license they use.
If you want to invest time into trying to get some money back from them to cover your lost rate, a real estate attorney would be who to talk to. They will likely be able to tell you the odds of getting any money from them. I would however be sure to use someone who will work strictly on getting paid from any money gained, as this could be a waste of time and futile for you.
When and if you decide to invest your personal time into retribution, be sure and consider how it will effect your stress levels, and how much time you will invest. Sometimes it's better to try and forget something nasty happened, as there's not much you can do about it.
__Getting to Magellan's question: "I've heard that some small mortgage offices are just unable to keep the rates they lock in for you. As I understand it, they have to "buy" the rate for you with your deposit from an "investor", but if rates go up too much from when they bought it, then they can't sell your mortgage for a profit. They then tell people they have to pay a higher rate and hope that most customers won't complain."
There's two types of lender rate locks typically. One where you simply lock in the rate for a period of days, 30, 45, 60+... 99% of lenders do not charge a penny to lock in a rate. They will however remove your ability to lock a rate if you have a bunch of loans not close that have been locked. At this point, they force you to have a full loan package before they allow you to lock a rate. This only effects donkey brokers who have LO's who are clueless.
The other type of rate lock, are for the lenders who lend their own money and sell it on the open market. These lenders could be more susceptible to wanting to change your rate, if the market takes an extreme change. Essentially they are funding the loan, making some money, then selling the loan to investors on the 2ndary market and making more money. These lenders would be mortgage banks, or just banks in general. Much less common, and tend to be much bigger. Most of these lenders however will honor their rate locks, even if they don't like it. However, recently the market took such a major hit to rates, I could see how they would want to sabotage a loan to get rid of it. They don't want to do a loan that costs them as a company $1000's to do.
When I liock in a rate.....it is locked! and even if the loan lock expires....I can always extend it for a fee that I will take out of my own expence unless otherwise noted. Here is a good question to ask your broker...and to see if the loan was really locked. A broker works with over a 100 Lenders/Banks so next time anyone is working with a broker ask them who is going to be servicing the loan? If they do not know...then you can expect unclear anwsers throughout the process and also indicates that nothing is concrete. I am thinking that you might have been locked in through the broker but exactly with a lender/bank who may require more paperwork such as in your case. Again...that is all in the eyes of my experiences....but somebody else may think I am totally off the wall.
In other news related to the mortgage industry, expect to see more Lending/Mortgage institutes to go under as did "America's Home Mortgage & Aegis went out last week. Expect to see a huge increase in rates and stricter guidelines with Jumbo Loans ( these are Loans $417K or higher) In addition...expect to see dropoff in the sub-prime industry as investors are backing away from the industry. I would reccommend to read articles in wallsreet or even on msnbc/cnn sites to get more accurate info on what is going on.
Locking a rate doesn't mean you get that rate. It means that if you can provide all necessary documentation, and everything gets cleared through underwriting you can then get that rate. 99% of lenders will let you extend the rate for a minimal cost, and often free if you just need a couple days. I believe you've just assumed that the rate wasn't truly locked, when we were assuming there was a problem with the loan. In addition, if you ask a broker who will be servicing loan, they typically will not know. With your comment about expecting unclear answers after they are unable to answer that question, either means you're loading the question, or you really actually believe that. The only lenders who service their own loans 100% are when you do a "portfolio" loan, and even then they could still sell it. If you want to make a best guess, just say Countrywide.
Sub prime has already priced itself out of most loans already. They people who can only qualify for this loan now have a rare chance of improving their situation. Most sub prime lenders will end up bringing rates back down once things settle. Most just overestimated their rates due to the 2ndary market going so daffy.
The entire industry is going through an overhaul, which will definitely make it harder for consumers who don't fit in the proverbial box to get a decent loan. At least in the short term...
6.0% on a 30 year fixed? How much in points and/or origination fee on that? If one or less points...the rate has not been that low in a long time (since early 2007 if I remember right).
"If it sounds to good to be true....it probably is"
My word of advice to borrowers is "ALWAYS USE SOMEONE YOU CAN TRUST". Brokers are not highly regulated in many/most states. You can't go on a rate quote alone. At least you saw the light and went to another lender.
Actually I am closing a loan in a few days for 6.5% on a 30 year fixed and closed a 30 year fixed last week at 6.375%
Yes, those loans are very much still available.
But you are right, go with a broker you trust or has been recommended to you by someone you trust.
The rate change shouldn't be happening but most locks are only 30 days and you have noted 6weeks. In terms of needing more information we are seeing that on several fronts. With the sub-prime mess, underwriters are being told daily of different requirements that need to be met. So if you are going to another lender, make sure to ask them what their lead times are, what are the worse scenerio's and best scenerio's and understand why the difference and I hate to say be patient as this time shuffles out.
Actually I am closing a loan in a few days for 6.5% on a 30 year fixed and closed a 30 year fixed last week at 6.375%
Yes, those loans are very much still available.
But you are right, go with a broker you trust or has been recommended to you by someone you trust.
We actually ended up with a 30 year fixed at 6.25. After much scrambling and the efforts of a very sympathetic and dedicated mortgage lender, we are closing tomorrow afternoon.
The original broker hasn't even returned a call. I believe that he may have been a new broker and may have promised something he couldn't deliver. I don't know what happened, but I sure would like to.
We actually ended up with a 30 year fixed at 6.25. After much scrambling and the efforts of a very sympathetic and dedicated mortgage lender, we are closing tomorrow afternoon.
The original broker hasn't even returned a call. I believe that he may have been a new broker and may have promised something he couldn't deliver. I don't know what happened, but I sure would like to.
What ever happened, I am glad that in the end you are going to be happy with your mortgage. That is a very good rate. The biggest appreciation you can show that broker that pulled it out of the fire for you is to refer them to everyone you know or come across.
As to the first one, when it is all said and done, go talk to them. Ask them, there very well maybe an explanation for it. They might not have had access to lenders the second one did. I do know A LOT of conforming lenders changed there requirements last week. Some halted all new applications until they re vamp their criteria, you might have just got caught in that?
Keep us informed though and enjoy your new home.
What ever happened, I am glad that in the end you are going to be happy with your mortgage. That is a very good rate. The biggest appreciation you can show that broker that pulled it out of the fire for you is to refer them to everyone you know or come across.
As to the first one, when it is all said and done, go talk to them. Ask them, there very well maybe an explanation for it. They might not have had access to lenders the second one did. I do know A LOT of conforming lenders changed there requirements last week. Some halted all new applications until they re vamp their criteria, you might have just got caught in that?
Keep us informed though and enjoy your new home.
We are sending the broker, the loan processor, and the girls at the title company big bouquets of flowers. We will switch our checking and savings accounts over to the bank where the broker works. Believe me, I will give her every referral I can. She turned a nightmare into a relatively easy and painless experience. I can't thank them enough.
We actually ended up with a 30 year fixed at 6.25. After much scrambling and the efforts of a very sympathetic and dedicated mortgage lender, we are closing tomorrow afternoon.
The original broker hasn't even returned a call. I believe that he may have been a new broker and may have promised something he couldn't deliver. I don't know what happened, but I sure would like to.
YAY!!!!! CONGRATULATIONS! And the very best of luck to you and your family in your new home! Enjoy!
Actually I am closing a loan in a few days for 6.5% on a 30 year fixed and closed a 30 year fixed last week at 6.375%
Yes, those loans are very much still available.
But you are right, go with a broker you trust or has been recommended to you by someone you trust.
6.5% & 6.375% are quite a bit different than 6.0%. When is the last time you closed a 30 yr. fixed at 6.0% with 0.75 points like the original poster was "locked" at? Like my post states...that was probably back in early 2007.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
