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Why won't lender lock rate?

I want to refinance FHA Streamline; lender (Lending Tree) says they can't lock until they get an FHA case number and have left me floating; is this normal; should I move to a lender that will lock in rate; they quoted 4.25 with a 1/8 rebate on the GFE; nothing in writing saying I will get that rate at closing; smell a bait and switch at closing...
  • November 08 2010 - Stone Mountain
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Answers (13)

I think the answer can best be found in a comment made by Carey Atwood, a veteran lender, at out brokers tour breakfast earlier this week:
"I used to tell people what interest rates were going to do for the next 30 days. Now I'm good for about 30 seconds."
  • November 12 2010
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most locks are 30 days????

I've been doing this two decades and the rate sheets I've always seen over the years have 60 days.
  • November 12 2010
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Robert, does your company do NOO FHA streamlines? If so, any hits to price? I ask because many only do OO and I believe the OP has an NOO streamline.  
  • November 11 2010
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atlredan14,
Lendingtree does have a lending division. Pay no mind to the previous poster.

Many Lenders won't lock you without having all the ducks in a row. Most locks are only good for 30 days unless you are willing to pay more for an extended lock. You have no idea how many times I locked someone in  early in the process and the loan closes past 30 days. The appraisal needs work, the customer drags feet with submitting docs, title is late, having a hard time getting case #.....there are so many things that can take a loan past 30 days to close.

I don't lock ANYONE prior to having a FULL loan package with commitment these days. If my Borrower wants to lock I am crystal clear with them that the loan most likely will not close in time and THEY will pay the relock fees.
 
This may be what LT is trying to do for you.

  • November 11 2010
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LendingTree is not a lender. They are a marketplace that brings together lenders and consumers. As far as a lock goes, I suppose every mortgage company has their own internal policies, but technically, if I had your name and property info, I could lock your loan as soon as I finish writing this post.... Not sure there any rules about having to have a case number to lock.... that's a new one on me....
  • November 11 2010
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ATL.. do yourself a favor and contact Clay Branch.  He is located in Georgia and will treat you right.  These yahoos you are getting from Lending Tree are not doing you any favors (and no they cna not charge you if you bail).  Clay's link is below

Clay
  • November 10 2010
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Wells Fargo offered me 5% with 2 point rebate; I thought 1/8 and 4.25 was a good deal; guess I'll keep looking; will lending tree charge me $400 for walking?

  • November 10 2010
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It's possible that he doesn't want to lock your rate because he doesn't know if your case number is locked up already.  If another lender has your case number, this lender can't do your loan.  Once the case number is pulled, you are his until it is cancelled out at FHA.  Therefore, he doesn't want a commitment in his system until he knows your number is clear.  But once you're pulled, you're his and no one else can work on your deal without some delays.

Even with the bond market tanking right now, 4.25 should have about 2points rebate, not 1/8th.  4.25 and 1/8 does not compute!  Move on.
  • November 09 2010
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I've been a mortgage broker for 8 years and i have never encountered that requirement w/ any of my lenders.  Having said that, this loan originator's company policy might require this as a safeguard to cut down on locks they have to burn by requiring that the borrower & property address pass the FHA screening w/ the issuance of the FHA case #.

There are reasons one, who hasn't integrity, would also want to float you for a while for hopefully a more economic outcome for them in the transaction.  Your loan must be pretty small for an FHA rate of 4.250% today - that pays quite significantly.  I'd advise you to get a competing bid to compare.  Competition breads better pricing and honesty.  I encourage my clients to shop me as well.  Good luck!
  • November 09 2010
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Profile picture for michaelmccollum
Different lenders do have different standard operating procedures, but I have worked for 4 lenders - 2 correspondent and 2 nationals and have never had to have an FHA case number to lock a loan. 

Regarding the rate, at only 1/8 rebate it sounds like you will be coming to the closing table with pretty good amount of cash.  Depending on your current rate, you may want to take a higher rate with more of a rebate and come to the table with less cash - assuming you are doing a streamline without an appraisal in which case you can't roll in closing costs.

Ask your lender to do a total cost analysis for you comparing different options so you can make an informed decision about what is best for you.
  • November 08 2010
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Once we get a loan application from a borrower, as a Direct FHA lender, we are able to order the case number (can take until the next day) and then lock you in for the approriate time it takes to close a FHA streamline.  This is the time from application until the end of the month with a minimum of 25 days and a maximum of 60.  The lender you choose should be able to do the same.
  • November 08 2010
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It's an FHA Sreamline...You shouldn't need all that much documentation to clear the loan to close and the lender orders the case number.  Work with someone that will lock your rate at application.
  • November 08 2010
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atlredan14,

If your lender does not yet have a complete file from you (all of your documentation) and does not yet have an FHA case number, it is not prudent, in my opinion, to be locking anyway. 

Without at least a pre-approval, you cannot be sure how long it may take to close your loan, thus it would be very difficult to know for how long you should lock.

My advice would be to speak with your lender and determine the estimated time frame for pre-approval and case number assignment.  Since they know they cannot lock you without them, they should also know how long it might take to have them.  If you are comfortable with their answers, you can proceed.  If you are not, you can search for another lender.

You will always be subject to perceiving bait and switch if you don't trust your loan agent.  Work on that part first, and I am confident the great rate will follow.  If I can help, let me know.



  • November 08 2010
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