Unapproved Mortgage Rate Lock Extension Fees

by Laura from Texas

Ask Kate how to avoid unapproved mortgage rate lock extension fees: Kate, today the private bank we are refinancing with sent me a new Good Faith Estimate and paperwork listing several thousand in fees that we must pay in order to get the original low locked-in rate to cover their "hedging".

Laura continues... The banker was very slow in processing our paperwork. We are now 70 days from the date the lock-in agreement was signed. The lock-in agreement was left blank in the "date lock-in expires" line, but the Good Faith Estimate listed it as good for 30 days.

We had provided the last of the additionally requested information 30 days after the lock-in agreement was signed (about 45 days ago), so the last month and a half of the delay has been all due to them.

He also never told me that he was re-locking our mortgage rate. Whenever I had called to check on the status, the impression I got was that everything was going to stay the same and it was just taking awhile.

We are thinking of walking away- do we have any options or are they probably hoping we go away?

Should we consider contacting regulatory agencies to complain?

Kate Answers: Unapproved Mortgage Rate Lock Extension Fees

Dear Laura,

Sometimes it's best to remove yourself from a situation when there is very little hope for turning it around.

In other words, cutting your losses.

I say this because although you could stay and fight for your rights, mortgage interest rates are volatile. They may remain at all-time lows, but no one can adequately predict the future.

Reputable Mortgage Lenders and Trustworthy Rate Lock Agreements

Why waste time trying to get unapproved mortgage rate lock extension fees waived while you could be locking in a decent rate at a reputable institution?

Moving on to another mortgage lender may be the best thing to do. But of course, I don't know your situation so this also depends on your ability to get approved for a home loan at another bank.

But let me say, I find this bank's behavior disgusting. Omitting an expiration date on a mortgage rate lock form is no excuse to charge you exorbitant lock-in extension fees. You didn't fill out the form, after all!

Yet, they are putting the cost of their omission on you.

Hedging vs Locking in a Mortgage Rate

I'd like to know where the bank's hedging fee appears on your original Good Faith Estimate! Even more so, the bank's hedging fee is NOT YOUR CONCERN! Plain and simple, they were hedging to play the market. It's a game.

Then your rate expired (that is, if you were ever locked in the first place) because the mortgage company did not process your refinance in a timely fashion.

And now they want to pile a so-called hedging fee on you too? How insulting!

Of course, you may be able to negotiate lower mortgage refinancing costs on the Good Faith Estimate by kicking and screaming. But in the end, can you trust that the negotiated fees will be all that's charged at the time of closing... especially with the bank's past behavior?

How to Really Get the Best Mortgage Rate

If you decide to switch lenders, don't shop for the lowest mortgage rate. Does this seem odd considering the name of my website is Get Your Best Mortgage Rate? It's with good reason that I tell you this.

Calling up lenders and telling them you are shopping for the lowest mortgage rate is like putting a sticky note on your forehead saying Please Take Advantage of Me!

Actually getting the best mortgage rate requires you to understand the lending process. This is why I started Ask Kate in 2007 - To empower home buyers and homeowners to get their best interest rate by unlocking the secrets of mortgage lending.

Please read more about shopping for mortgage lenders and affordable monthly house payments at Little Known Secrets To Refinancing.

In closing, equip yourself by understanding how to lock in your interest rate. This is the best way to avoid mortgage rate lock extension fees. Go to my Mortgage Interest Rate Lock Series and follow the links for further assistance.

Good luck and best wishes,


P.S. I also recommend writing your local, state, and federal representatives in the government. Start by contacting Texas Department of Savings and Mortgage Lending at 877-276-5550. Make your voice heard!

Ask Kate & Comment

Anyone can ask Kate a question or report on their progress, which helps other homeowners in the same boat, by adding a comment. (Follow link near bottom of the page.)

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Beat the Bank at Its Own Game - The Mortgage Freedom Project
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Hear what Suzana says after reading The Mortgage Freedom Project...

I'm following your magical steps in hopes of getting my financial situation under control. Thanks for your help!

Go here if you also want to get out of debt and pay off your mortgage early without sacrificing your lifestyle!

You'll find even more questions and answers at Ask Kate about Mortgage Rate Locks.

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