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Good News! Consumers can lock rate with one lender, and then shop that lender against others...

According to a REA on this thread...

"I believe it is wise to have at least 2 lenders..    They don't charge fees to lock in the rates.   So if rates go down you lock in with lender #2........see if lender #1 will match it."

While it's not my desire to stir-the-pot just for the sake of doing so, I find it hard to believe that a person in the RE business would advise clients to do this.

Doesn't this (i.e., getting a rate lock and then having the consumer back out) impact a mortgage professional's relationship with lending sources?

Is there a behind-the-scenes-cost to the mortgage professional, beyond any relationship issues with the lenders?
  • December 12 2013 - US
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Answers (7)

Dave alert, lol!

Who pays for the $1000 ( 1/4 point of 400K loan ) extension when they find the new lender will go 10 days past the Closing Date because the 2ND appraisal took too long to get. Better yet, what if it doesn't appraise? There will be no going back to the Original Lender. The clock starts ticking once the Contract is executed.  
  • December 13 2013
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Dave will find out quickly that Loan Officer's do not like to be "conned", and they value their time and expertise too much to waste time appeasing an ill advised Agent. It would be appropriate for the LO to refer one of Dave's customers to another Agent they work with, as that Agent may know of a better value. Neither is professional, and neither is Dave's advice about credit score not being negatively impacted if multiple reports are run in 60 days. 30 days would be max "safe timetable".........
Fortunately, Dave's game plan will only last until the first LO finds out borrower closed with another lender Dave recommended. They will also discover what Dave and borrower are up to when they see their credit report with inquiry from another lender(s) with in a few days of their's, and will be required to ask borrower for an explanation of why they applied for credit with another lender.
There will always be creative ways to "game the system", and the mortgage meltdown is classic example of how much damage it can do to consumer's and lender's.
Portland lenders -  DAVE ALERT  - DAVE ALERT!

  • December 13 2013
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Aaron, excellent response, I agree 100%.
  • December 13 2013
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Hello everyone, 

Give me a moment while I step upon my soapbox.  My views on this topic are purely my own and do not represent those of anyone else, or reflect the overall position of my company.  

I fully realize that this has turned into a pro-to-pro thread, which is not the intent of this particular part of Zillow, but unless the moderators decide to remove this, the general public has access to it and I feel it's very important to address this head on. 

To be sure, you can lock with one lender and then go shopping.  You have every right to do that as a consumer.  You could call me today, get locked in, get the process started, then go talk to someone else next week.  You can keep talking to other people until you find someone lower, then you can basically extort me to give you better terms than the loan you initially agreed to.  I cannot speak to any other mortgage originator, but here's how I approach these situations: 

By the time you've locked a rate with me I've spent hours and hours working on your loan.  You and I have probably spent at least an hour getting to know each other.  I've spent a lot of additional time you don't even know about researching your options and presenting those to you.  I've spent time answering your questions.  I've spent time preparing your application, reviewing your income documents, and preparing everything for underwriting. 

After all of that time, and after providing what I always strive to be world class service, you come back and tell me you found someone who can do the loan a little bit cheaper, or at a little bit lower rate.  

This is what I affectionately call "borrower black mail."  I do not negotiate with black mailers.  If you do not appreciate the service I have provided and the fact that I am delivering you a loan with the terms you agreed to, and you're simply trying to beat me up like I am just selling a commodity, I do not want to work with you.  My time and experience are too valuable.  I will tell you go to with that other lender and even send them all of your documentation if you request it in writing. 

Consider it this way:  if you applied for a loan, worked really hard to get me everything I requested, and then I called you and said "hey, you're rate is going up by .25%" how would you feel? 

The simple fact is that after the passage of Dodd-Frank in 2011, there's no incentive for me to provide you a loan that has anything but the most favorable terms I can offer.  If you find someone cheaper than me, it's generally because the market has shifted.  We don't have "hidden fees" any more.  We don't get anything extra for charging you more fees or a higher interest rate.  We're not out "to get you."  

Remember that most of us work very hard.  Remember that most of us are in this business to help people.  Remember that we're people too.  Just like we commit to you that we'll do the loan, most of us have a reasonable expectation that you're committed to us too.



Thanks,
Aaron
  • December 13 2013
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And, Brian - are rate locks free to borrowers?
  • December 12 2013
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you are correct.   When a lender locks a loan with their investor, there is an expectation to deliver the loan to them. If a lender has to cancel too many locks with a particular investor, they run the risk of the investor terminating the relationship or putting them into a lower tier where they are not able to offer the best rates or pricing. 

From the looks of it, Dave is relatively new here (only 7 posts). He needs to realize that we are all here to answer questions from the general public to help them, not to bash on each other or offer damaging advice.  How would he feel if he spent hours and hours showing property to a potential buyer and then the buyer went to a new agent to write the contract for them?  Pretty sure he would be upset about that!

  • December 12 2013
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I would take it up with Dave. I seem to have missed the "rate locks are now free" missive from any of the dozen or more mortgage reps who attack my inbox.
  • December 12 2013
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