A Consumer Guide to Mortgage Rate Lock-Ins
(Part 2)

One of the most frustrating problems consumers face with mortgage companies is making sure that the rate they are quoted at the beginning of their loan application process is the same as at the closing of their loan. At Residential Finance Network, we execute borrower rate lock requests as soon as possible and provide borrowers with written (or E-mail) confirmations of those rate locks.

ASK ABOUT LOCK-INS

When you're ready to settle on your loan, you'll want to get the loan terms that you've locked in. To increase that likelihood, it is important to learn as much as you can about what the lender is promising you before you apply for a loan. Ask for the following information when shop for a loan:

Lock-Ins and Fees

* Does the lender offer a lock-in of the interest rate and points?

* When will the lender let you lock in the interest rate and points? When you apply? When the loan is approved?

* Will the lock-in be in writing? If the lock-in is not in writing, you will have no record of the lender's agreement with you in case of a dispute.

* How long will the lock-in last (3, 60, 90, 120 or more days)?

* Does the lender charge a fee to lock-in your interest rate? Does the fee increase for longer lock-in periods? If so, how much?

* If you have locked in a rate, and the lender's rate drops, can you lock-in at the lower rate? Does the lender charge you an additional fee to lock in the lower rate?

* Can you float your interest rate and points for now, and lock them in later?

Loan Processing Time

* How long does the lender expect to take to process your loan?

* What has been the lender's average time for processing loans recently?

* Has the lender's loan volume increased? Heavy volume might increase the lender's average processing time.

Expiration of Lock-ins

* What rate will be charged if the lock-in expires before settlement-the rate in effect when the lock-in expires?

* If you don't settle within the lock-in period, will the lender refund some or all of your application or lock-in fees if you decide to cancel the loan application?

* If your lock-in expires and you want to get another lock-in at the rate in effect at the time of the expiration will the lender charge an additional fee for the second lock-in?

COMPLAINTS ABOUT LOCK-INS

Knowing what to look for puts you in a better position to decide whether, when, and how long to lock-in mortgage terms and, by helping to keep the loan process moving, you can lessen the chance that your lock-in will run out before settlement. But what if your lock-in does lapse? If you believe that the lapse was due to delays caused by the lender or someone else involved in the loan process, you should try first to reach a mutually satisfactory agreement with the lender, if that effort fails, consider writing to the appropriate state or federal regulatory agency.

Some lender actions, such as offering lock-in terms which are impossible to fulfill, failing to process you loan diligently, or causing your lock-in to expire are improper and may even be illegal. In addition, because you may have contractual rights under your lock-in or loan commitment, you may want to consult with an attorney. Be aware, though, that complaints may not be resolved as quickly as may be necessary for a home purchase. Depending upon their authority under applicable state or federal law, regulatory agencies may either attempt to help you resolve your complaint directly or record your complaint and recommend other action.

STATE AGENCIES

State consumer protection officers, banking authorities, and offices of the attorney general can be contacted regarding complaints against many lenders doing business in the state. (Some states have enacted legislation to specifically address complaints about mortgage lock-ins.)

This guide was prepared in consultation with the following organizations:

American Bankers Association

American Institute of Real Estate Appraisers

Comptroller of the Currency

Consumer Federation of America

Credit Union National Association, Inc.

Federal Deposit Insurance Corporation

Federal Home Loan Mortgage Corporation

Federal National Mortgage Corporation

Federal National Mortgage Association

Federal Reserve Board's Consumer Advisory Council

Federal Trade Commission

Independent Bankers Association of America

Mortgage Bankers Association of America

Mortgage Insurance Companies of America

National Association of Federal Credit Unions

National Association of Home Builders

National Association of Realtors

National Council of Savings Institutions

National Credit Union Administration

Office of Special Adviser to the President for Consumer Affairs

Society of Real Estate Appraisers

The Consumer Bankers Association

U.S. Department of Housing and Urban Development

U.S. League of Savings Institutions

Veterans Administration

This guide provided by the Mortgage Bankers Association of America. For more information, contact the Mortgage Bankers Association of America, Consumer Affairs Division, 1125 15th Street, N.W., Washington, D.C. 20005