Two days before closing and bank is changing rates? Can they do this?

Asked by Unhappybuyer, Harrisburg, PA Wed Sep 23, 2009

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Unhappybuyer, Home Buyer, Harrisburg, PA
Fri Sep 25, 2009
hey wanted you to know that the bank came through and did the right thing. I did converse with an attorney who advise me to stand our ground. I told the bank that we would walk away from the entire deal and then seek reimbursement of all funds that were paid out already. Luckily, I had all my son's copies of everything he signed and the disclosure showing the lower interest rate.I was told that underwriting kicked it back because the bank did not know it was a condo until the appraisal came through. The sales agreement clearly was checked that it was a condo from day one. Clearly a mistake made by the bank. It has been a very long day and even though the loan is not going to close when it was suppose to, the bank is going to honor the interest rate.
so thanks everyone for your comments. I just wanted to let you know how it turned out.
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, ,
Thu Sep 24, 2009
Thanks for the reply Unhappybuyer. The condo would change the rate, if its a conventional loan. If its an FHA loan, the condo would have no affect on the rate. Do you know what type of loan it is?
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, ,
Wed Sep 23, 2009
Bill,

You're correct that the loan could still be floating, and of course, rates change every day.

That said, the lender must disclose when the rate is locked. Even if the rate went DOWN, a new disclosure would be needed and you would have to wait 3 days.

Unhappybuyer, this really is black and white. If the loan was locked, they cannot let you close within 3 days of disclosing different terms. If the loan was floating, then they would have to wait 3 days after they lock it. Either way, new disclosures are needed and a 3 day waiting period is needed.

.
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William Rudge, Agent, Boiling Springs, PA
Wed Sep 23, 2009
Keane is partially correct as are all of the others. If you son's interest rate was not locked then it can go up. The new regs require that the mortgage company must disclose an APR change at least 3 days prior of closing. During this time your son may accept the rate change, reject it and lose the home, or challenge it. I would seek to speak to someone a level or two higher than the mortgage loan officer. Make everything in writing and even an email with a confirmation of receipt would be a good idea. It is a very tough situation for your son. Mortgages are getting tougher to get, appraisals have not been favorable lately in our area, and most lenders are running scared due to all of the changes they are seeing which seem to happen weekly and sometimes daily. Seek some legal advice quickly. Good Luck and I hope things work out for the best for your son.
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, ,
Wed Sep 23, 2009
Here is a simple answer to your question. No.

Regulation Z laws (RESPA) requires that if your APR changes more than .125%, you must be disclosed at least 3 business days prior to closing.

There are new laws in place as of July 31st about this. Look up Mortgage Disclosure Improvement Act.

Not only is it not allowed, but regulations are only getting MORE tighter to protect consumers.

They were supposed to send disclosures when your rate was locked. Did the lender do this? If your terms are locked, you should know exactly what your loan pricing is and how long it's good for.
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Unhappybuyer, Home Buyer, Harrisburg, PA
Wed Sep 23, 2009
In response to both posts. Thank you for the information...the bank told me that it had to do with underwriting...home being purchased is a condo and loan officer put it through as a townhouse. underwriting kicked it back. now since the rate was only locked in until Monday, the day of closing, the bank is saying the rate will go up. the loan officer is taking the blame for the mistake but is not or doesn't seem at this point willing to accept the responsibility and keep the rate that was on the disclosure statement...the different is a full half percent. I am actually the mom here. My young son is purchasing the home and right now I feel the bank is trying to take advantage of him...I absolutely plan on fighting this...every bit of information provided to the bank said condo...why should he be penalized for their mistake.
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, ,
Wed Sep 23, 2009
This is a difficult one. Sometimes thing happen in underwriting which change the rate. sometimes, the bank is just trying to make more money and sometimes the rate was never locked. It could be a number of reasons for the rate change....as long as the bank properly discloses to you the rate change. There are some loan officers out there that try the bait and switch tatic. This is when you are offered a rate that isnt even close to what is available, but the loan officer figures he can switch it up at closing..its hard to prove. so the real answer is, it can be changed, but it must properly be disclosed. if you dont like the new rate, play hardball and try to negotiate. did they tell you why the rate changed? how much did it change?
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This is quite similar to a mess I am dealing with right now. I was set to close on a condo today. Yesterday afternoon, the lender said the underwriter discovered that the seller owned 13 of the 21 units in the condo community. This had never come up during the entire process, even though the seller's agent, my agent, the title company and I all confirmed with the lender repeatedly that tenancy will not matter. They assured us this would not be reviewed. Now they have "discovered' a parallel contingency at the last minute and offered me a portfolio loan at 4.5% instead of the locked conventional loan of 3.875%. It's REALLY not very much money in my case, but why would they burn me over such a small amount?
Flag Tue Nov 14, 2017
Demetrios Ko…, Agent, Harrisburg, PA
Wed Sep 23, 2009
Your loan officer should have locked in your rate by now and told you exactly what it was. If not, shame on them. If not locked, then it can change but that doesn't mean you have to agree to the loan. You should fight it.
Web Reference:  http://www.harrisburbs.net
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