Mortgage Rate Lock and Estimate of Closing Costs

by Roger C. from Rosemead, CA, Los Angeles County

Roger asks Kate about a broken mortgage rate lock after receiving the wrong Good Faith Estimate of Closing Costs: Roger locked his interest rate over the phone with his broker. But when he received faxes of his Good Faith Estimate and Mortgage Rate Lock Agreement, the paperwork belonged to another homeowner's loan file. Now he's being asked to pay additional points in his closing costs to lock in a higher mortgage rate! "Is this a trick?" Roger asks me.


Broken Mortgage Rate Lock and Misplaced Estimate of Closing Costs

Hi Kate, On Monday 11/05/2012, I agreed and locked in a mortgage rate at 3.4%. Then I was told to submit necessary documents and disclosures before 4pm Monday.

Broken Mortgage Rate Lock and Good Faith Estimate of Closing Costs
The Good Faith Estimate and disclosure letters were emailed to me immediately after the conversation. I prepared all necessary documents and printed out the GFE and disclosure.

When I was reading the disclosures, I realized they belonged to a different borrower but there was plenty of time left. So I sent emails and phone calls regarding the mistake but got no response back.

Then my broker got back to me at 4pm, sent new forms back to me after 4pm. I was told that it was too late but to submit all documents and disclosures to him, so he may submit in the morning.

Tuesday 11/06/2012 morning, I was told to send in a copy of bank statement ASAP. So I did.

Before lunch time I received a phone call from broker and was told that he could not lock in the rate because it was submitted after 4pm on Monday, but he can offer me Tuesday's rate of 3.675% from 3.4%.

He refused to honor the Good Faith Estimate and all disclosures.

There was also a rate lock and float agreement that was signed and checked off appropriate box regarding lock and rate agreed on. Was told by broker that he would lock in rates when they come down. So I gave him to the end of the week.

On Friday 11/10/2012, I spoke to his immediate supervisor and I was told there was nothing he could do, but they would try to structure something for me so I may have the rate I wanted. I was told that rates were at 3.44% 20 min earlier.

After my complaint, I was told by broker that I could buy down points from the new rate of 4.675%, confirmed with him twice, and got back the same response.

Must they honor the mortgage rate I requested to have locked? Was it a trick to have me submit all personal documents so I may feel obligated to them. Did broker purposely send me someone else's documents? Is there anything I can do to get them to honor the rate? Are there any laws being broken? Roger C.

Kate Answers: Mortgage Rate Lock and Estimate of Closing Costs

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Roger,

Why wouldn't the lender honor the mortgage rate you requested to have locked? After all, the rate was confirmed verbally over the phone and they faxed you confirmation.

Just because your mortgage broker was sloppy enough to fax you another homeowner's Rate Lock Agreement is immaterial, in my opinion. (I can't imagine the other homeowner would be pleased to know their information had been faxed to a stranger!) Even worse, your broker could not be bothered to call you back to fix his mistake. And now they'll structure you a new deal like they are doing you a favor. Hey Roger, just buy today's higher mortgage rate down to your locked-in rate by paying points! Ludicrous!

Mortgage Broker Complaints Go to California Department of Corporations

Was this a trick? I doubt you'll ever get anyone at the mortgage company to come clean, based on what happened when you called them back to discuss the apparent mishap. But the broken mortgage rate lock and missing Good Faith Estimate of closing costs can be reported to The California Department of Corporations:
"You should always file your complaint with the Department, regardless of whether you are resolving your dispute through another forum. The Department relies upon complaints received from investors, borrowers and consumers to ensure that our Licensees are complying with the licensing laws, and to locate and stop investment fraud."
Call the Consumer Services Office at 1-866-ASK-CORP or 1-866-275-2677.

Before calling, write down a summary of your complaint, including who, what, when, and where, and other relevant details. Have copies of documents supporting your complaint within reach to answer any questions.

Good luck and best wishes,

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