Sly Mortgage Rate Lock Cancellation Fee

by Danielle in Washington DC

Ask Kate about a sly mortgage rate lock cancellation fee: Hi Kate, We signed an interest rate lock and fee agreement with a well known bank. But the seller of the home we were planning to buy cannot provide clear title to the property. Now the bank wants to charge us $2000 in a mortgage rate lock cancellation fee.


Danielle continues... It is now looking like the seller won't be able to remedy title for many, many months. So we have been thinking about backing away from the purchase agreement.

The bank today said we'd owe over $2000 for a Mortgage Rate Lock Cancellation Fee if we withdrew (operative word) our application for which we have locked the rate.

However, the fee wouldn't apply if our application were denied or if we withdrew within 6 days of application, which is long gone. If we are denied, we are responsible for the appraisal and credit report fees which are still far less than the $2000.

It is a standard rate lock for 60 days which expires in a few weeks.

Is the best course of action for us to seek to be denied by the bank? This doesn't seem right because we are set to being approved. Or is there something to allowing the agreement to expire? Thoughts welcome, Danielle

Kate Answers: Sly Mortgage Rate Lock Cancellation Fee

***zz-portrait-left.shtml*** Dear Danielle,

Well, I'm thinking the bank is either slow on the uptake or playing dumb.

If your seller is unable to provide clear title to the property you wish to buy, the lender knows they cannot approve your mortgage application.

Cancelling Your Mortgage Rate Lock Agreement

So why should it be up to you to cancel your mortgage rate lock agreement? Why should you have to seek to be denied? Why should you to need to withdraw your mortgage application?

The bank has no choice but to decline your mortgage application but NOT because you lack credit worthiness. Then why? Because the seller cannot provide clear title to the property.

In fact, you could pound on the door of the mortgage company, begging for mortgage approval. But without clear title to the property you want to buy, your efforts would be in vain.

The bank is not going to approve your application for a mortgage because the seller cannot provide clear title to the property.

As always, if in doubt, contact an attorney.

The Meaning of Clear Title to Property

Clear title to property is important to home buyers and homeowners! If you don't get it when you buy a home, you may get a very unwelcomed knock on your front door!

Want to see what I'm talking about? Go to How To Get A Mortgage - Meet Your Title Insurance Companies and I'll meet you there.

Good luck and best wishes,


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