Any of you ever caught a lender red-handed?

Situation:

Parents are purchasing/building a new home and it was written into the contract that the home would be finished by March 1, and you know the builder built himself some "buffer" into that, so realistically you think it more possibly could be February sometime. Needless to say, come the middle of January, the builder informs them that it is coming along smoothly, they were right on schedule if not a little ahead and that they should go ahead and lock-in their rate with the lender (90-day lock.) So they did, the lock was from Jan 11 until Apr 11. Well come first of April it still looks to be another 3 to 4 weeks on the home before it's completely finished and ready to close on. The loan officer that they were working with has been fired, the one they are replaced with is now saying that there is no way she can extend the lock (for a fee) she says that they will need to get the current rate and buy it back down. Well they locked in at 5.625% and the current rate is 6.25% so it's a little over 2 points to buy it that far down. So instead of $500 to 1000 to buy a 15 or 30 day extension, they want to charge $2500 to buy down the new rate, basically this new loan officer doesn't want it coming out of her pocket and is blatantly saying they can't do that, "my supervisor won't allow me to do that" is the line they are giving them.

So I call up as a random real estate agent working with a new client who is interested in new builds and I was just inquirying about services, what lock-in periods they have, option to extend, etc and the SAME woman tells me that yes they can do all of that.

It wasn't an hour later she was calling them back saying she would offer a lock-extension for $725 for 15-days.

Why can't we just have honest people in this business, it makes you sick.

-J

Josh,
I've done plenty of long locks. 90 days plus. Many times, to save the borrower money, we will take a 90 day lock and extend it if needed. Rather than pay for the longer 120 lock upfront. Or, some lenders won't even do a 120 day lock. So the trick is to get a 90 day lock then extend it for 30 days when the expiration date gets closer.

Get the woman to quote a new lock, rate and fee, in writing. Take the new quote with the original lock quote to the supervisor and demand an answer. If it isn't already expired, as you said it expires on 4/11 so you still have a day, the supervisor should get the extension. I would ask for them to eat the extension fee for the dishonesty of their officer...

Brett

Las Vegas is too hot of a market to even deal with that stuff right now

Deal with what stuff? If a build is a few weeks behind then this is something you might have to deal with if the lender is being difficult and shady.

BGlines,

We got them to extend the lock for an additional 15 days for $700 which should be plenty of time, they are doing finishing touches this week and they have to close by the 22nd so they should be good to go now. It would have been over 2 points to buy it back down to what he had locked it in at, it was 5.625% when he locked it in, now it is up around 6.25%.

-J

I think the 6.25 rate is giving the broker 1 point on the back end.I quoted two people today rates in the high 5s because they had excellent credit.I could have sold them a higher rate(6.25) and gotten paid by the lender as well as my origination fee.Just something to think about.

Hi Josh,

Sounds to me like the guy who originally quoted the loan (later fired) probably mis-quoted & they were hoping to use the blown delivery date as a way to make that back. When lending for new construction I generally lock for at least 30 days more than the builder estimate and often more depending on the builder. You get to know which ones are chronicly late to deliver. That way, I have the worst case scenario locked & I can always move the borrower to another lender or float down if rates have improved.

I like working with borrowers who are buying new construction because the lenders used by builders often cannot lock for more than 90 days which makes no sense at all and those juicy "incentives" you sometimes see are simply built in to the loan.

I hope everything closed OK on this one for you. - Tim

We're good to go, they are closing Wednesday at the original rate, and the builder paid for the extension which the lender finally offered... for $700 of course.

-J