Day 90 of Re-Fi and Lender Surprises w/ New Fee (loan, fixed rate, heloc)

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So I'm on day 90 of a re-fi with a lender who has been poor at communication but had been offering pretty good rates. I got an automated notification that something had changed and they were sending out new disclosures (but no details on what). Everything looked the same (loan amount, term, etc.) except that I noticed I was getting $1,000 less back (it's a cash-out refi).

When I looked at the details, I saw the lender credit (part of the rate lock) had reduced by $1,000.

I asked about it and they finally responded that it's a fee by Fannie Mae for re-fi's with a subordinate loan (I have a HELOC I had hoped to leave open). Sounded like BS to me since there's a separate "Subordination Fee" listed on the closing cost details sheet. I also questioned why they missed it three times when they sent me the original closing cost estimate, an updated estimate (where I changed the prepaid points), and a third when the original rate lock expired.

But I see from this page that there may in fact be a fee: https://singlefamily.fanniemae.com/media/9391/display (Table 3, page 4)

So I'm pretty upset that we're 90 days in and still haven't closed, that communication has generally been poor, and that now they're trying to charge me an extra $1,000 beyond what was disclosed/agreed to.

They are telling me my only option is to pay the fee or to try and pay off the HELOC by rolling it into the re-fi. I don't mind paying it off, but I wanted to leave it open (it's got at least 20 years left) for later possible use since HELOCs are apparently harder to get right now?

Do I have any wiggle room here? I was going to propose that they take the unexpected fee out of their origination fee, but I don't know if that's possible or reasonable. I really don't want to start all over with this lender or another lender. I believe rates may be slightly better than what I locked at, but they told me previously they would charge me to re-lock (despite the original lock expiring due to their taking so long).

[SmartMoney]

What does your lock agreement say? When did you lock in? Most lenders put this 1/2 point Adverse Market Refinance Fee fee into effect the first of this month. The problem is you won't find anyone without the fee if you are looking for a fixed rate loan in the conforming or high balance range.

There are some instances where the fee will not be present in a refi: jumbo loan amounts, loans not intended for sale to Fannie or Freddie.

To put it bluntly, pay it, change loan programs, or forget the refi.

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Originally Posted by SmartMoney

What does your lock agreement say? When did you lock in? Most lenders put this 1/2 point Adverse Market Refinance Fee fee into effect the first of this month. The problem is you won't find anyone without the fee if you are looking for a fixed rate loan in the conforming or high balance range.

There are some instances where the fee will not be present in a refi: jumbo loan amounts, loans not intended for sale to Fannie or Freddie.

To put it bluntly, pay it, change loan programs, or forget the refi.

Thanks SmartMoney. The rate lock agreement (dated 8/1) just says "This lock-in agreement is not a commitment or agreement to grant your loan request or a loan approval. The loan must be fully underwritten and all conditions must be met prior to loan closing. It is important that you provide all requested documentation in a timely manner. Lock-in terms will remain in effect through the expiration date of your lock." Obviously it notes the details of the loan, including the discount fee amount/points. When the lock expired, they sent out two subsequent change of circumstance notices but never sent any updated rate lock information (though each notes the extended date of the rate lock).

They are not claiming the new fee is the adverse market fee - they're stating it's due to the subordinate loan, which according to the document I linked in my first post would add 0.375% (and the math adds up based on the re-fi amount). The adverse market fee would add another ~$1,350 onto the loan cost.

Shouldn't they know this (they keep talking about the hundreds of loans they're processing)? It just seems like BS to spring it on me the same day they finally tell me they're ready to close (90 days after starting this adventure). Feels like being at a car dealership. Maybe I will just abandon the re-fi if they won't eat the fee - they've already done all the work and I've paid nothing so far. Just take the ding in my credit score for the hard pull and move on.

[SmartMoney]

Sorry, been away for a bit.

Yes, they should have caught the add-on for the 2nd lien. But some places are so overwhelmed, they have no idea how many loans are in their queue or who has what. The bottom line is if you are not locked in (or lock has expired), you aren't covered. Most places are either providing a 90 day lock or free extensions or locking when an approval is issued. Most lenders don't want the regulators crawling all over them for issuing 60 locks when there's not a prayer of closing in that window. That's about the only issue I can see you could create a stink about - lenders are not supposed to offer a 60 lock if there's not a reasonable expectation of closing in that period. You can file a complaint with CFPB, but you will need excellent record keeping. Like the date you applied, the date the loan was submitted, date approved and so on. The threat of filing the complaint has more value than the actual complaint.

If you aren't happy, keep shopping. I don't think this will be the last time rates are low. In fact, I think if the economy heads the way I fear, we are going even lower.