My lender locked my floating FHA rate without my permission. The rate has dropped; help?

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FHA 30 fixed is still around 4.875% on 0 points.

It sounds like you paid for the appraisal before receiving the truth in lending statement; that's been against the law (MDIA) since July.

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November 02

Kevin, "925Looking2Buy"
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Kevin, "925Looking2Buy"

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This does not shock me the least. My mortgage broker locked me today without any authorization - this is a month before anticipated closing date. The rate is 5% on a $700k FHA loan with .75 point. I am still trying to determine if that's a good rate but it's hard to find quotes or averages for FHA "conforming jumbo".

To be fair I'm not really complaining as I think there is much more upside risk at this point and very little room for further rate reduction, so it makes sense to lock unless you are paying a huge premium for the lock. At some point they do have to lock it as underwriting is approving you for a specified payment based on a specified rate, and any increase in rate and payment could affect that.

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November 25

adot
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Christine Hynes, "LoanModSpecialist"

@Christine: I called them on it as soon as I was made aware that they had done it. Again, the rate lock sheet I signed specified "FLOAT", and never did I give my agreement to lock a rate.

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November 09

Christine Hynes, "LoanModSpecialist"
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why didn't you call them on it when they locked it instead of after the fact?

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November 09

Andrew Adams, "203K Specialist"
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Adot,

The bankers or brokers profit margin should not impact who you choose to work with. If I can make a higher profit margin and provide you a better deal...would you not take it?

Focus on what you are paying.... not what the banker or broker is making you are focusing on the wrong thing when looking at YSP or SRP!

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November 04

PaymentChoice
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@ adot

In knowing the SRP and/or YSP all you be comparing is what the LO is making on the back end of things.

Personally I do not see why this is relevant as you should just be focusing on rate and costs as you compare offers as these are what affect you and your pocket.

If offer #1 is 5.00% with $2k in costs and offer #2 is 4.875% with $2k in costs, what would it matter what the LO is getting paid on option #1 or #2. At the end of the day you are making the payment based on "X" rate with "Y" in costs, as long as they deliver on what the quote why would you be concerned with what either of them is making?

Some choose to work on thinner margins than others, some have slightly better pricing than others, ultimately you'll be paying based on the terms of your loan, not what the LO ends up making.

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November 04

adot
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Robert Benham, "Down to 580 Lender"

Andrew: what disclosing the Service Release Premium (SRP) on my loan (and any fee discounting that buys me) would do is let me compare apples-to-apples what I'm getting. I know that the law doesn't yet require this, but I'm one consumer that hopes it soon will. I for one think that bankers and brokers should be on even ground.

Robert: he doesn't take or return my calls (he stopped after he had my card number), and reported that the rate hadn't moved in something like twenty days. I have a short sale addendum that expires Monday, so I'm pretty well stuck.

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November 04

Robert Benham, "Down to 580 Lender"
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adot,
Have you had "this much" discussion with your Lender?? Good lord,...all we can do is speculate on your situation which is working you into a tizzy of details. Most of which you really don't need to know.

I'm being sincere. Call your Lender, have him explain exactly what he did and why. If you feel you are being cheated then cancel. You may say you already did that,..but since we have no communication with your Lender,...we cant tell you what happened. Call them again. Dont let them off the phone until you understand.

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November 03

Andrew Adams, "203K Specialist"
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Adot,

The only thing a banker doesn't disclose and a broker does is YSP (Yield Spread Premium) which has no bearing on what you the consumer pays at closing. All disclosing that has done is get folks to focus on the wrong things...

I broker as well as direct lend so I have disclosed both ways. What I (or any broker) and or the bank make on any given loan should not be factored into what is a good deal to the consumer.

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November 03

adot
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Clay: thanks for your insight. Pretty hard to say, I guess, really.

Andrew: great point. I do wish I'd have gone with someone who did spell things out more appropriately... and not something that looked a bit less expensive.

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November 03

Andrew Adams, "203K Specialist"
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Clay Branch, "Georgia Loans"

Adot,

Broker...banker makes no difference...either can be a slime ball and none of the new regulations will stop the slime from being slime! Your situation has nothing to do with how the lender discloses information. It has everything to do with who they are as a person.

The tough part is knowing the difference between who is telling you the truth, who is taking advantage, and who is telling you what you want to hear! Most consumers don't gravitate to the truth....who wants to hear the not so good news about financing....

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November 03

Clay Branch, "Georgia Loans"
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If your lender stopped quoting on Zillow, they may have been forced to. If it is 1 week between stopping and starting, then they were probably busted for quoting something they could not back up.

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November 03

adot
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Andrew: thanks for the insight. Thing is, there's no closing scheduled (still waiting on the appraisal management company to come back), so there is no basis (and no authorization from me) for the lock.

I do agree that things need to be more regulated, and that bankers ought to have to abide by the same rate disclosures as brokers (and, for instance, disclose any fee discounting rolled into a bumped up rate).

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November 03

Andrew Adams, "203K Specialist"
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The lender may have had to lock you in to close your loan on time.

Not that he is not hosing you rate wise but you can no longer float a rate until the day before closing particularly if rates are worse than initially disclosed.

Bait and switch hits a week early.... rather than at the closing table. Not that on a purchase the buyer can do much about it and still close on time. More legislation written from the ivory tower rather than the street!

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November 03

adot
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Latest-greatest: no response from banker, but their rate page now advertises 5.000 with 0.875 discount points.

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November 03

Rudi Hofmann, "CA UMB"
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Rudi Hofmann, "CA UMB"

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Nic Netherton, "ColoradoLender"

Newmildew,

You are right! I apologize Adot. ... Good luck to you, Rudi

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November 03

Nic Netherton, "ColoradoLender"
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Who was the lender adot? Like Joe said make sure to leave an appropriate review so future consumers don't get the same treatment.

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November 03

adot
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Joe: thank you.
His GFEs and TIL show a lender fee of just a bit under 0.5%. If there was any fee discounting, nothing he has given me (or said to me) has indicated it, and when asked point blank, he stated there was not. Take that as you will.

He doesn't seem to have quoted since Zillow started talking fee structure for leads; funny, that.

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November 03

Joe Cafiero, "jcaf1918"
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Joe Cafiero, "jcaf1918"

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5.0% with 1 discount or 5.25% with 0 is basically the same thing. As long as 5.125% does not come with any extra fees take it and put this mess behind you with a little comfort that rate historically is very good. You can not risk losing the purchase so close to the finish line. I would be curious to see what this lender (and I use the term loosely) was quoting on Zillow the day he locked you in. Be sure to light him up on the review and enjoy your new home!!!!

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November 03

adot
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Joe: sorry, correction; 5.000 with 0/1 (discount), thus my guess that 5.125 is possible (and what's actually on the rate sheet).

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November 03

adot
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Joe: thanks again for your responses.

I did just about what you've just suggested at about five yesterday evening: I tracked down the banker's manager's email and sent him (and the banker) my note regarding the fact that I had not authorized a rate lock. I offered him the opportunity to correct his error (locking me without my permission) and suggested a float-down to a least 5.125 (the bank's own site is offering FHA30 @ 5.00 with 0/0 in my locality) as a recourse.

I'm likewise nervous about this messing things up; FHA underwriting required repairs (which luckily, the seller has performed) already made me miss the first closing (last Friday), and I'm hoping the appraiser has been back to get things settled to close this Friday.

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November 03

Joe Cafiero, "jcaf1918"
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Joe Cafiero, "jcaf1918"

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Adot. The bad part about this is that if you are coming up to the closing date their may not be much you can do without putting your purchase at risk. The seller, especially with a short sale and a bank on the other side, is not going to care that you are getting hosed with the rate. The only advice I can give is to go up the ladder to management and see if you can get the rate lowered (over the last week or so 5.0% was definetly doable). Have all your emails ready to provide to show that you never authorized the lock. Most banks will allow the loan officer to change the rate based on the rate sheet on the day the loan was locked. No promises it will work. They know they have you over a barrell. The other thing that you must do is to rate this lender accordingly here on Zillow. The review system, even though flawed, is really the only way lenders can be kept on the level.

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November 03

adot
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Joe: sure did; his initial GFE showed 4.875. By the time I finally had a signed contract (from the seller's lender, as it is ashort sale), rates had jumped to 5.000. I decided to float (which may have been stupid; at least, I thought so until yesterday; I asked again about rates and was told I was locked). For the last two or three weeks, daily emails (he won't take or return my calls) have yielded his claim that rates have been unchanged from 5.250.

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November 03

Joe Cafiero, "jcaf1918"
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Joe Cafiero, "jcaf1918"

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Tammy...you need to find another FHA outlet. I am sure that Tim will concur that 4.875% is paying over a point especially on what we can only assume is a short term lock. Unless this is a $60,000 loan and or the borrowers credit is shot, 5.25% is a little high. Adot, did you find this lender on Zillow?

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November 03

adot
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-Penner Law Firm - -Hartford Title-, "pennerlawfirm"

PF: thanks for your thoughts.

I have done a little reading, regarding transferability of appraisals, etc, and have been having a hard time figuring out what can be done. The bulletins (26 and 27) I recall reading from the national appraisers organization (the name escapes and I don't have time to dig it up) seem... hazy on whether or not most appraisal management companies will assign them to another lender.

Unfortunately, the documents I have list both my name and that of the bank's as the appraisal management company's clients (with a slash between, ala "/"). When I spoke to them (the AMC) about getting the latest version of the report from the appraiser (FHA issues and utility turn on troubles required multiple visits), they told me that their policy was only to release paperwork through the lender half of the client. Funny, huh? Anyway, that sort of suggests to me that getting them to remove the lender's name and replace it with another might be ugly at best and likely impossible.

Thoughts?

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November 03

-Penner Law Firm - -Hartford Title-, "pennerlawfirm"
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Timothy Sutherland, "SunTrust"

Timothy:

If I understand correctly he's already paid for the appraisal, so there shouldn't be any additional fees on that end.

adot: If you do go to another lender, you should try to convince them to use the already-completed appraisal. No reason to pay for it twice!

You should be careful switching lenders though, it very well could be you're not going to get out of this deal any cheaper than 5.25 with no origination fee.

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November 03

Timothy Sutherland, "SunTrust"
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FHA is very friendly in regards to changing lenders and will get involved if the lender tries to "hold up" your attempt to transfer.

FHA does however allow the current lender where you've applied to charge you from 0.5 points to 1 point if the appraisal and/or loan have already been underwritten and a signed MCAW (mortgage credit analysis worksheet) has been issued by the underwriter before they have to transfer the case number.

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November 03

adot
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Timothy: if you're still out there, one more question: as this is an FHA loan, is it likely or possible that the bank I've been working with can "spike" (put some kind of hold) on my file with the FHA and prevent changing lenders? I've read a bit about this happening, but don't have the body of experience to judge whether or not this is the reality.

Has anyone had experience, one way of the other, in this regard?

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November 03

adot
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Tammy Stockdale, "Colorado Mtg Broker"

Tammy: I'm not sure if it makes any difference to how you evaluate the situation, but this is from a banker, not a broker.

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November 03

Tammy Stockdale, "Colorado Mtg Broker"
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