brokered refi - lock-in agreement not honered by investor?

Asked by Akin, Omaha, NE Mon Jun 2, 2008

I am working with a mortgage broker to refi a residential investment property. I talked to the company, they ran my credit score, gave me a rate. I asked for the paperwork, and it took me 2 days fax everything, the w2s, bank and ira statements, etc. Now he says that his investor upped the rates. Can he do that? What is the purpose of a lock -in if the investor can back out any time??

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Chris Davis, , Phoenix, AZ
Tue Jun 3, 2008
Hello Akin, Sorry to hear that had happened to you. The Loan officer unfortunately didn't price your loan correctly and instead of telling you the truth and telling you that he decided to say the investor upped the rates. Yes the Lending crisis has changed and Investors are being scrutinized currently. It sounds like a strait forward loan, I would recommend to call your Realtor that put you into the Investment and the previous loan officer, or call me at least I will price it for you correctly.
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Forefront Re…, Agent, Rancho Cucamonga, CA
Mon Jun 2, 2008
Hi Akin..Unfortunately, there are a lot of brokers out there that choose to play this version of the shell game. Here's how the back side of your rate works. Brokers very seldom lend their own money. So they have no ability to "lock" that money. The only entity that can is the "investor". That is generally a generic term for the mortgage bank actually funding your loan. When your rate is legitimately locked with a bank, that bank issues a rate lock in writing. What often times happens is the broker will tell you he locked your loan and not do so. He is hoping the rates will go down, keep your rate the same, and pocket more income.It sounds like rates may have moved up on him and the mysterious "investor" backed out. If your rate was locked with a bank, unless your loan criteria didn't match what was locked, that particular loan program disappeared, or the bank went out of business, they don't just dishonor a commitment. I would strongly suggest calling his bluff. You may not get anywhere,but it's worth a shot. I wish you good luck. While I can't help you directly, if you have questions, all my contact info can be found in my web link below.
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