topic Re: Bank rejected locked in rate? in Mortgage Loans

Bank rejected locked in rate?

Hevj1119 — Sat, 06 Jul 2013 20:47:04 GMT

My colleague just sent me this message: I got a disturbing call from my lender. He told me the interest rates had spiked significantly enough since I locked in my rate that the bank decided to reject the rate I was promised.

Can they do that?

Re: Bank rejected locked in rate?

StartingOver10 — Sat, 06 Jul 2013 21:13:01 GMT

Interesting. What was the rate you locked in and how long ago did you lock it in?

Re: Bank rejected locked in rate?

Hevj1119 — Sat, 06 Jul 2013 22:00:10 GMT

I'm guessing he locked in somewhere between 3.15 and 3.5, probably about two months ago..

Re: Bank rejected locked in rate?

swtneka — Sun, 07 Jul 2013 00:27:50 GMT

I thought once u sign the dotted line u were locked and couldn't be undone till the date has passed?

Re: Bank rejected locked in rate?

jadeite788 — Sun, 07 Jul 2013 01:18:19 GMT

yeah I noticed too about the rates. They went up drastically this past Friday. And yeah they can do that. Something don't smell right in the water. This is causing me drastically to reconsider what I really need in a house. I suspect by the end of this year they will be at 7-8%

Re: Bank rejected locked in rate?

swtneka — Sun, 07 Jul 2013 01:30:27 GMT

@jadeite788 wrote:
yeah I noticed too about the rates. They went up drastically this past Friday. And yeah they can do that. Something don't smell right in the water. This is causing me drastically to reconsider what I really need in a house. I suspect by the end of this year they will be at 7-8%

Yea I am having some doubts on something as well.... All I need is a house in good community not a gourmet kitchen and huge master! i just need to sign and get it over with b4 the interest rates are insane to the point i cant even afford the house at base price

Re: Bank rejected locked in rate?

jadeite788 — Sun, 07 Jul 2013 01:36:12 GMT

@swtneka wrote:
@jadeite788 wrote:
yeah I noticed too about the rates. They went up drastically this past Friday. And yeah they can do that. Something don't smell right in the water. This is causing me drastically to reconsider what I really need in a house. I suspect by the end of this year they will be at 7-8%

Yea I am having some doubts on something as well.... All I need is a house in good community not a gourmet kitchen and huge master! i just need to sign and get it over with b4 the interest rates are insane to the point i cant even afford the house at base price

I am diffenently trying to stay at or under my 2.5 times my salary.

Re: Bank rejected locked in rate?

Hevj1119 — Sun, 07 Jul 2013 03:04:19 GMT

What's drastically?

Can a bank legally not honor the rate you locked in at?

Re: Bank rejected locked in rate?

Hevj1119 — Sun, 07 Jul 2013 03:05:52 GMT

Or is it more likely he never locked in?

Re: Bank rejected locked in rate?

Anonymous — Sun, 07 Jul 2013 03:07:50 GMT

@Hevj1119 wrote:
Or is it more likely he never locked in?

That's what I suspect...the rate was never locked.

Re: Bank rejected locked in rate?

rubaty — Sun, 07 Jul 2013 03:08:56 GMT

I thought the longest a rate could be locked was 60 days before closing?

Re: Bank rejected locked in rate?

kimmiller112 — Sun, 07 Jul 2013 04:25:56 GMT

I was told I could lock in a rate at anytime in the two months prior to my closing. I'm doing a new build that should be ready by the end of December, so I imagine I can lock in sometime in November or December. Is this why you aren't able to lock in? Maybe you tried locking in too soon and it was declined.

Re: Bank rejected locked in rate?

Walt_K — Sun, 07 Jul 2013 05:08:37 GMT

@rubaty wrote:
I thought the longest a rate could be locked was 60 days before closing?

As far as I am aware, you can lock for any period of time. A rate lock is just a contract. The bank agrees to give you a certain rate for a specified amount of time. Typically, if it is longer than 60 days, they will charge you for extending the lock. But there is nothing that says they have to do that. I was given a 65 day lock with no extra charge.

To the OP, I would advise your friend to look at his lock agreement. What time period is specified? Are there any provisions that allow the bank to back out? If not, he should try to enforce his contract. It's not his problem that rates have risen. If they can no longer get that rate from any of the investors they deal with, they should be on the hook to buy the points to pay the rate down.

Re: Bank rejected locked in rate?

Hevj1119 — Sun, 07 Jul 2013 17:57:05 GMT

Thanks Walt, I will pass along the message.

Sad part is for some reason they are going for a loan over 3x his salary as it is so the higher rate means they'll have to walk away from the house.

Re: Bank rejected locked in rate?

Anonymous — Sun, 07 Jul 2013 18:31:27 GMT

@Hevj1119 wrote:
Thanks Walt, I will pass along the message.

Sad part is for some reason they are going for a loan over 3x his salary as it is so the higher rate means they'll have to walk away from the house.

My guess is that the rapid spike in rates will force many other buyers already under contract to walk away as well. Especially those who were buying new construction.

Re: Bank rejected locked in rate?

Hevj1119 — Sun, 07 Jul 2013 18:48:10 GMT

Yeah I can see that. Very unfortunate.

It seems like what we suspected happened, happened. "What I think happened is my lender SAID he locked me in but missed the deadline, then without telling me took a gamble and floated it to wait and see if rates would go back down, but instead the rate took a sharp spike. "

Do they have any options?

Re: Bank rejected locked in rate?

Anonymous — Sun, 07 Jul 2013 19:28:29 GMT

I don't think there's much he can do without a written lock agreement.

If he has an email communication confirming the date and rate the LO agreed to lock, he can try working with the lender to see if they will agree to buy the rate down to what was agreed upon in the email. As mentioned in another post, if the lender's investors are no longer offering the rate he thought he was locked at two months ago, he will be stuck with current pricing.

Re: Bank rejected locked in rate?

Hevj1119 — Sun, 07 Jul 2013 21:27:56 GMT

Anyone have a rough idea what the rates are running at today?

Re: Bank rejected locked in rate?

jadeite788 — Sun, 07 Jul 2013 22:10:59 GMT

@Hevj1119 wrote:
Or is it more likely he never locked in?

That could be an option too. If he never locked it. Ya screwed.

Re: Bank rejected locked in rate?

Hevj1119 — Mon, 08 Jul 2013 12:58:04 GMT

Ok, I've got a bit more information..

He doesn't have a written lock agreement, and he doesn't have any email or written communication confirming the date and rate the LO agreed to lock. He has their application / approval document with 3.38% on it, along with their GFE with 3.38% on it, and their HUD1 for their July 2nd closing with 3.38% on it. That closing didn't happen, and it was July 5th that the LO called and said "No no, sorry your new rate is 4.75%"

They aren't going through a broker, they're going directly through a loan officer at the bank. They did some math and it's 19K to buy the points to get the rate down.

Any suggestions? What are their chances of winning this battle?