need help, Other/Just Looking in 19083

what's the rule in extending the lock rate after the expiratation date? should it be adjusted to market rate?

Asked by need help, 19083 Mon Sep 15, 2008

Due to some disagreements with the lender on the market price of my property (comps). the lender has decided to extend the rate. Now that the market is down, I don't understand why it was not adjusetd to the market rate. The contarct states that it's subject to higher or above the stated rate or current market rate. How the lender decide as what it should be? What is threshold that federal/state law dicate per the locked rate? Thanks in advance

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Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Tue Sep 16, 2008
Lender answer:

When you lock a rate, your lender is making a commitment to deliver your loan (if it closes) into a certain investment pool, which is where your rate came from in the first place. Pricing for a rate depends on the length of time the investor is expected to "hold" your rate for you... lock periods are usually 30 days, but can be a short as 10 days and as long as 360 days.

nce a rate is locked, the investor charges a fee to extend since loger rate lock periods cost more. If the rate lock expires, the investor applies "worst case pricing" which means any discounts avaliable when your rate was locked will not be applied to re-lock.

As a rule, investors refuse to allow lenders to request a new lock until 90 days have passed. This is to prevent borrowers from rate-jumping when rates go down, in the same way borrowers are protected from rate hikes on locks when rates go up.

If you wish to re-lock a lower rate, you have three options:
1.) Pay the lender a fee to re-lock - there is no fee if your lock provides for a "float-down" option
2.) Withdraw your application and apply with a different lender
3.) Withdraw your application and wait 90 days to re-apply.

Bear in mind that a rate lock works both ways: Your rate doesn't go up (during the lock period) in a rising rate environment, and your rate doesn't go down (during the lock period) in a falling rate environment. The purpose of a lock is to do just that: lock.
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Scott Godzyk, Agent, Manchester, NH
Tue Sep 16, 2008
there isnt any laws regarding rate locks, each lender will have their own rules and policies regarding this, your loan officer has alot to do with getting you the lowest rate. pres them to do that and if they wont, by all means change lenders, even the threat of leaving may get you commission oriented loan officer to get the lower rate for you. good luck
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Carol Cei, Agent, Maple Glen, PA
Tue Sep 16, 2008
Unfortunately, you have to abide by the language in the agreement that you signed. It is very atypical for a lender to lower rates unless you have a "float-down" provision in your loan package. I would go back to the loan officer or his manager. If that proves to be unsatisfactory then contact the State Banking Commission for PA in Harrisburg. They will be able to clarify for you as all lenders in PA are regulated.

Hope that this is helpful!!
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Chris & Step…, Agent, Philadelphia, PA
Tue Sep 16, 2008
I would direct these questions directly to the loan officer and your buyer's agent. I do not understand what you mean about disagreements regarding market price, I am presuming you are referring to the appraisal ? In some cases, a second appraisal can be ordered if there are justifiable reasons to order one.

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