Rate Lock Deposit (loan officer, approval, fees, upfront)

[gc333]

Hi, what can I do to get back my $450 rate lock deposit? If I get my deposit back does the loan officer have any way of knowing if I decide to go with another bank? Thank you.

[annerk]

The whole idea of taking the deposit is to keep you from going elsewhere. Unless you have a legitimate reason for not being able to comply with an u/w condition, the chances of getting the rate lock money back is almost nil.

Of course if it's a refi you could go through with it the execute the right of recision to get it all back--but that's a bit unethical if your only motivation is a slightly better rate elsewhere.

If the motivation is unhappiness with the current lender, have you spoken to them to try and work things out? They can't fix it if they don't know it's broke.

[VictorBurek]

It is very doubtful you will get a refund. Some companies charge money up front so even if you back out, they still get something just like annerk said above.

[NJ987654]

It is illegal in some states to bill you if you haven't submitted a signed application. What state? Other then that type of legal typo, you will have to pay it.

May I ask why you expect it back? did they do something or did you committ to do the loan and now want to change it for some reason?

[Bridget]

Our mortgage guy told us today that the application fee can be refunded up until the appraisal being done. Then that fee pays for the appraisal. I would be up front with your mortgage person and go from there.

[renriq02]

Depends what state you're in, and what kind of company you deal with.

Some states do not allow upfront fees...but lenders still do it.

This rule does not apply to banks or direct lenders

[SmartMoney]

My fellow loan officers are being rather kind........I must just be in a witchy mood today.

But in no particular order........

A signed application is not necessary to fulfill requirements of what constitutes a mortgage loan application. Our laws recognized that in 1999 with the birth and growth of the internet and other electronic means of communication.

Lenders cannot interchange the words "appraisal fees" and "application fees." Both fees have exact definitions and both fees must be disclosed as to what they are when collecting them. Appraisal fees are typically refundable if not spent for appraisal services. If an application fee is collected, it's refundable if the loan application is denied. If an appraisal fee is collected and the service is performed, the applicant is entitled to a copy of the appraisal. With a conventional appraisal, the appraisal remains the property of the lender, regardless who pays for it. On a VA or FHA appraisal, the borrower can direct ownership, but in the lender's name and ONLY if they have paid for it. Many places use to charge an application fee, which would put them in a profitable position if they received a loan approval with just a drive-by required (as opposed to a full walk in appraisal). As always, there are exceptions and circumstances, but they are not the norm.

Almost every state has additional requirements, over and above RESPA and Truth in Lending, regarding fees collected in conjunction w/ a mortgage loan application. If you wrote a check for an appraisal fee, application fee, or lock deposit fee, chances are a disclosure was issued or accompanied the collection of those funds, detailing the refund procedures or availability of the collected funds

Now, for the rate lock deposit. In many cases you can push the issue of refunds when refinancing on an owner occupied property (non owner occupied loans are exempt). Forget the fact that you would be squealing like we all know what if the lender decided not to honor the lock in upward market conditions and suddenly asked that you pay a higher rate. And for that reason, I don't think it's fair to share under what terms that money would be refunded or the best way to expedite a refund.

Almost always, I am a champion for the consumer and will share every trick in the book that a lender may use against the consumer. However, in this case, there is every possibility an individual loan officer may wind up personally paying for someone's desire to back out of coverage they requested. This is true if they are a broker or an employee at a bank. I have been employed by both and have had to personally pay at both employers in this exact situation.