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Lender threw a curve ball on rate lock extension! - How do I approach?

Hello,
I had locked my rate (30 days) with a lender 3 weeks ago.  The lender also mentioned that I could extend my rate lock if needed paying 1/8 of a point off my lender credit (confirmed in email).  My loan has even been conditionally approved and final approval expected any day.

Earlier to this week my mortgage officer sends an email out of he blue stating that their "investor" is not open to rate lock extension and he's trying his best to fix that and keep the same terms.  I was like what in the world...  :(.  Finally yesterday he came around and said everything is good & the "same" terms as discussed earlier remain. I have specifically asked him to email me the exact dollar amount for my 21 day extension would cost. I know what it should.

1. What should I be weary about? What should I ensure further? I am still within my DD period but would hate to change lenders now & rates have gone up

2. I also noticed that "rate lock disclosure document" does not mention anything about extension terms/conditions.  All discussion about rate lock extension and fees was discussed in email both earlier and now. Is this typical?

3. Once I close, I am worried about how the servicing of my loan would be (given the above experience). What questions should I ask regarding that?  (or am I just being paranoid)
Thx
  • December 20 2013 - Raleigh
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Answers (16)

Profile picture for DFisherBroker
Most locks are longer than 30 days. I would get another lender to look at my file and quote me their terms for the same loan, then compare APR's. It might be cheaper to switch.  If you have a real estate agent involved, they could assist you in evaluating your options.
  • December 26 2013
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Here you go Brookstone:  14 23 26 36 39 46

Ok, Ok, I admit those numbers came from Pasa's fortune cookie ( he would have squealed if I didn't admit it ). Had these numbers hit I would have split with Paul and it would have fit the storyline, 1 winner from CA and 1 winner from GA. But, I am 100% sure Pasa would have recognized his numbers and filed a legal challenge. Then there is the thread the numbers were posted on, the one you created, so another challenge. I am guessing we ( Me, you, Paul, Hamp, and a few more ) could have settled for Pasa getting 1/2 and the rest of us splitting the other half. I think I will play these numbers tonight. 
 
  • December 21 2013
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Profile picture for Blue Nile
Yes, that 5 minute time editing window does amazing things... especially when one post is at 12:27 pm and the next post is at 12:28 pm
(pacific time).  I remember when the time editing window was much longer, over 20 minutes.  It caused lots of problems.  It cause even more problems when there was no time limit; agents would post garbage, get people riled up, then remove the entire content of their posts and pretend that everyone else was crazy.
  • December 21 2013
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Profile picture for Brookstone Mortgage
"Good point by Brookstone too."
___________

Wow, you are psychic! You responded to a post I made prior to me making it! I always new you were talented Clay but this is amazing. You should have given me the lotto numbers earlier this week. 
  • December 20 2013
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The LO will disappear like a pleasant odor.
  • December 20 2013
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Profile picture for user10699400
Thx Hamp.  Yes goofy :).    When I asked about who would be servicing my loan post closing & I would manage/view my account etc, I got a unclear response too. Being a first time buyer, I wanted know such things. I am not sure if I am asking for too much clarity prior to closing.  I assume this loan officer would pretty much disappear post closing... right?

  • December 20 2013
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Excellent point, from the sharpest knife in the drawer, Brookstone!

OP
The Mortgage Banker, you're dealing with, sounds a bit goofy. I sure hope his pricing is great. I'd be sure to nail him down on the lock extension pricing, now, regardless of who may end up paying for it. Having the Seller pay could make the BK court have to re-review the transaction. Hopefully, not.
  • December 20 2013
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Profile picture for Brookstone Mortgage
The seller had filed a chapter 13 (the property is exempt and is not bank owned, not a short sale etc. has been confirmed). But he via his attorney has to file (has filed) a motion to allow sale (free & clear of liens) at the BK court."
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This sounds like the delay is due to the seller, you should have your agent negotiate wit the listing agent to have the seller pay for any extensions that are required. 
  • December 20 2013
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They are saying no online access until they sell the loan and he does not know who the investor will be when they do sell. If they have not sold the loan when the first payment is due you will mail the check to them.  

Good point by Brookstone too. 
  • December 20 2013
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Profile picture for user10699400
"Clay,Yes and yes it's a purchase. The seller had filed a chapter 13 (the property is exempt and is not bank owned, not a short sale etc. has been confirmed). But he via his attorney has to file (has filed) a motion to allow sale (free & clear of liens) at the BK court.  We expect to get the approval 1st week within our new DD period.  My lender has also clarified the fees to extend my rate lock.  So everything seems in order and I am within the safety of DD.

Only other part that's unclear to me: Is how will the loan be serviced as in will there be an online portal for me to manage it after closing? etc...  

I asked the same to my loan officer, but the response I got (as below)... went over my head. certusbank advertises itself as a direct lender

"I  am not sure who will service it but initially you will make a payment to us.  No online portal for us until we start keeping loans to service I imagine.  But if And when it is send to an investor, I would imagine that will be available."
  • December 20 2013
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Are you waiting on anything other than the Clear to Close? You mentioned your " DD period " so this is a Purchase? Rate extension cost vary from 1 Lender to the next and is not always in the same increments going out like .125 for each 7 days, it could cost 1/2 point for 21. You still have a week left on the original lock so if the final approval will come soon and it is a Purchase then you may not need any extension as it will fund on the same day as Closing.         
  • December 20 2013
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Lots of good questions!  You are in a great position since you are still in your Due diligence period.  I would strongly suggest getting some additional advice from 2 or more local lenders - check with your agent to see who they use.  Most agents will have 2-3 lenders they can refer. Also, because interest rates are going up, lenders are doing less business right now and might be more motivated to earn your business.  You can shop lenders against each other to get the best rate.  If you have an Academy Mortgage in your area, I would look them up; they close loans in 10-15 days and no games.  You pay what you are quoted.  
  • December 20 2013
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1.  You always have the option to use whatever lender you want.  Any fees outside of what you were told and promised should be paid by the lender.  They can do that.  You just have to hold their feet to the fire.  When push comes to shove and you tell them you will walk away, they will do what they need to do in order to keep your business.

2. Clay is absolutely right on this point

3.  Chances are that they will not be the ones servicing the loan.  If they are servicing the loan, you shouldn't have any reason to be concerned.

  • December 20 2013
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Profile picture for user10699400
Clay - 1/8 point was for 7 days. So right .375 for 21.  What question if any should I ask further? My lender is certusbank. Thx for your reply.

  • December 20 2013
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Yes, it is typical you will not see extension terms on that doc because it is assumed you will close within the original lock terms. Covering the extension using some of the Lender credit is also typical but it should be more than 1/8th of a point for 21 days, more like .375.  
  • December 20 2013
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Just because you lock a loan rate some mortgage brokers keep floating their loan looking for better rates from their investors which makes them more money. Sometimes they guess wrong and will often pass the blam on to the investor so they don't have to explain what happened. Sometimes, not always.
  • December 20 2013
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