Slippery Mortgage Interest Rates and Your Lender

by Harry from Florida and more...

Ask Kate about slippery mortgage rate locks and murky lender policies: I've complied new sources of authority for borrowers to turn to for help when they can't reach a mutually satisfactory agreeĀ­ment with their mortgage company after failed lock-ins. Why? Murky policies and practices are still causing grief for unsuspecting home buyers and homeowners. Meet Harry whose gut tells him the lender is stalling until his rate lock expires. Then there's a home buyer who lost his locked interest rate after his broker gave him faulty information.


Q1: Why Is My Mortgage Company Stalling My Refinance

By Harry from Florida

Hi Kate, Thank you for taking my question.
Slippery Mortgage Interest Rates and Your Lender

I received a promotion from my mortgage company to refinance at a lower payment with a lesser term of 20 years compared to 30 years. My question is I have a gut feeling the company is stalling since the lock out rate is beginning to expire.

I paid $600.00 to get the house assessed. This is the same mortgage company that holds the mortgage I have now.

I was asked questions regarding liens that do not exist. I asked to talk to the underwriter which I was told had been switched, and was denied.

Do I have any recourse? The home is in Pennsylvania and I live in Florida.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers Harry: Why Is My Mortgage Company Stalling My Refinance

Hi Harry,

First you should know many underwriters are reluctant to approve mortgages that are not classified as run-of-the-mill principal residences.

So you could be running into some insecurities on the part of the bank if this property is perhaps a vacation home and especially if it produces rental income. But more than likely, your lender is stalling for one of the following reasons:
  1. You were quoted a lower than market interest rate as an enticement to apply with this company. When the market tanked, rates went up making the offer even more inaccessible.

  2. You were quoted an owner-occupied interest rate even though you do not live in the same state as your property. Perhaps an oversight?

  3. You were quoted a legitimate rate but someone forgot to lock you in. Then rates spiked overnight. Think it couldn't happen? Think again! See Mortgage Rate Lock and Closing.

  4. The lender hedged rates and lost. Now their line of credit is overdrawn and they can't close transactions. So they stall loan fundings as in the case of Michelle to keep from fessing up.
You have a battle ahead if you if you wish to fight this shoddy business of deliberately losing locks. You can start with the mortgage originator and proceed up the ladder of the company until you find someone with the authority to make decisions.

Borrower Help for Failed Mortgage Rate Lock-Ins

After that, your next step is the Better Business Bureau, if the bank belongs to the organization. Next rung is the state Attorney General for Florida and Pennsylvania.

Next on the ladder is the federal government. But who you contact depends on the institution processing your mortgage. Based on the Federal Reserve Board website, here is how to contact the appropriate federal regulatory agencies supervising your lender.

Mortgage Companies
Contact: Federal Trade Commission
Consumer Response Center, Washington DC
Phone number: 877-382-4357

Federal Savings Association and National Banks
Contact: Office of the Comptroller of the Currency
Consumer Assistance Group, Houston, TX
Phone: 800-613-6743

State Member Banks of the Federal Reserve System
Contact: Federal Reserve Consumer Help, Minneapolis, MN
Phone: 888-851-1920

Federally Insured Non-Member State-Chartered Banks and Savings Banks
Contact: Federal Deposit Insurance Corporation
Consumer Response Center, Kansas City, MO
Phone: 877-275-3342

Federal Credit Unions
Contact: National Credit Union Administration
Office of Public and Congressional Affairs, Alexandria, VA
Phone: 800-755-1030

I wish you much success and hope to hear back from you.

Sincerely,

Ask Kate

Q2: What Happens to My Locked Mortgage Rate After Switching Houses

Hi! Rates have gone up since I locked a rate with a mortgage broker. My question is does the 'lock' stay with the property or between the home buyer and lender?

What Happens to My Locked Mortgage Rate After Switching Houses
My mortgage broker, real estate agent and the mortgage processor who works for the broker made a mistake.

To explain, I was buying a condominium in North Carolina on a beach that was supposed to have a master insurance policy and flood insurance.

When the processor asked me to provide my insurance company name and policy number for the homeowners insurance, I was confused on what I needed.

So I asked the broker who said all I needed was a small policy like renter's insurance, in case something inside the condo was destroyed like in a hurricane or burst pipe. I was told the master policy would cover common areas, like if the unit was destroyed.

I started doing more research and I discovered the condo had no master policy and we were responsible as an owner for any damage, inside or out. So, I terminated the contract.

During the 2 days it took for me to get a contract on another condo, the U.S. Bureau of Labor Statistics (BLS) unemployment data came out. The markets went haywire because they feel it is a positive report the mortgage rates went up a good 500 basis points.

(I don't think it was a positive report though because there are negatives in the report and I have very little trust in anything the government releases; I think an economic recovery is foolish, given all that I have read.)

I want to know if I am locked into the earlier interest rate or not. My broker doesn't know yet and the underwriter he has chosen seems to hold the cards.

Please give me your thoughts. I really don't want to point out how I was mislead by the agent, broker and processor.

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Ask Kate answers: What Happens to My Locked Mortgage Rate After Switching Houses

Yes, most likely, you locked in a rate that was tied to a specific address. This is referred to as a lock that runs with the property.

But you won't know for sure without perusing your written mortgage rate lock terms and agreement disclosure.

However, I am confused why the mortgage broker isn't familiar with his lock policy. It is the responsibility of a loan professional to read the lock-in disclosure that should have been given to you to sign. (This is another can of worms which I won't get into here. However, if you have more questions, please leave a comment on this page so I can answer you.)

Back to your written agreement, if it clearly states the property address of the previous condo you were buying, that probably indicates the lock was tied to that one exact property. But you will also have to read the lock agreement fine-print to get into the details of the terms and your rights as well as your obligations.

Read more at Elusive Mortgage Rate Lock Guarantee.

Best wishes for a successful rate lock,

Ask Kate


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What recourse do I have against a lender who failed to close my refinance within rate lock period?
by: Mary from Walnut Creek, CA

What recourse do I have against a lender who failed to close my refinance within the mortgage rate lock-in period?

I just refinanced my personal home. I was supposed to close my non-owner occupied a few days later. But the lender failed to mail the subordination agreement request to Chase until after the rate lock expired.

A few weeks later, it was finally recognized in the system as approved. But my rate went from 3.96% to now 4.8%. The reason for refi was to lower my payment. But it has gone from $264 monthly savings to more like $60 monthly savings.

Hi Mary, Kate here. Don't sit back and accept this as inevitable. Earlier on this page, I outline sources in the government where you can report this behavior and seek recourse.

If it means you must scream, kick, and shout to draw sufficient attention to the lender's mistreatment, throw your best tantrum. You've got my support!

Kate

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You can also ask Kate about your mortgage at How to Find Your Mortgage Lender.

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