Lender mistake on interest rate, what can I do?

Asked by nachyaonline, Culver City, CA Wed Sep 4, 2013

We are in escrow for 2 months, the lender has taken 6 weeks to complete their process. I had asked the lender to lock the interest rate 2 months ago but the lock expired after 45 days and I am now getting the current rate which is much higher. The loan was approved on Friday and the lender has told me that I have no other option but to go with the interest rate. Because of lender and loan officer mistakes I have already lost a month in escrow and now I have to pay higher payments every month. What are my options? Why should I pay more for their mistakes?

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Steven Ornel…, Agent, Fremont, CA
Wed Sep 4, 2013
Hi nachyaonline,

While we're only getting 1/2 the story it sure seems like your lender dropped the ball in regards to the Underwriting process, and additionally, management of the rete lock. Quite frankly, the lender should have been tracking the rate lock expiration date in order to give you the option to pay for a rate lock extension. In addition, it also seems your Agent was less than diligent in understanding the status of your loan.

"What are my options?"

1) Continue with purchase.

2) Cancel the contract and loose a portion or all of your deposit if all contingencies have been removed.

3) Pray that your Agent placed a max loan interest rate% in Para 3C(1) of the purchase contract that is lower than the new rate being quoted to you right now.

4) Ask the Loan Officer to help you pay-down the rate now available.

"Why should I pay more for their mistakes?"

That's a great question to ask the Lender's top Manager and your loan officer.

0 votes
Alex Khalili…, Agent, Woodland Hills, CA
Mon Mar 16, 2015
Your agent needs to go to battle for you and ask for that loan officers and get to his/her manager.

Please let me know if you have any other real estate-related questions!

Alex Khalilifard | Realtor - General Contractor
Listing and Selling Agent
Direct: 818.925.8088
0 votes
carlos parra…, Other Pro, Monrovia, CA
Sun Sep 8, 2013
Not much choice but to buy with them or walk. If you have more time, look for another lender. But the rate will be the current rate.
0 votes
JR Thrasher, Agent, San Diego, CA
Thu Sep 5, 2013
Ask for a rebate from your loan officer to buy down the rate.

J.R. Thrasher
0 votes
nachyaonline, Home Buyer, Culver City, CA
Thu Sep 5, 2013
Thank you for all the answers. I was able to get a credit from the lender that will cover my losses for a few years, not ideal but better than nothing. I shopped around yesterday and the current lender still has the best rates so taking the credit and moving forward is the best option at this point.
0 votes
Good move, and congratulations!
Flag Thu Sep 5, 2013
Colin Robert…, , Los Angeles, CA
Thu Sep 5, 2013
Yes, locks expire. Think about it. Someone can't offer pricing for the foreseeable future on anything.

This is a common scenario, lenders and their staff make mistakes all the time. This is a great opportunity to negotiate a lower rate/fees to make up for their mistake, assuming they never told you that A) locks expire and B) when it was expiring and C) didn't take action to keep it from expiring.
0 votes
, ,
Wed Sep 4, 2013
Well, unfortunately a lot of lenders are trying to move into the purchase market. But it is a lot more complex and most do not understand it actually, so we are seeing more and more of this. The laws in CA make it very difficult to go after these lenders.
0 votes
Gail Mercedes…, Agent, Beverly Hills, CA
Wed Sep 4, 2013

This is unfortunate because if you cancel with this lender and shop loan more than likely the rate will be the same or higher than current lender is now quoting. I would request talking to highest positioned manager at current lender. Explain situation and finance results of lender not getting final loan approval within 45 days. Current lender has processing time records of this transaction. There records should be able to reflect why mistakes were made extending closing date. Good Luck!

Gail Mercedes Cole
EXP Realty Marina del Rey
0 votes
Scott Godzyk, Agent, Manchester, NH
Wed Sep 4, 2013
You really need your agent to go to bat for you and ask for that loan officers manager. You should have been watching that rate lock date and re-newed or extended it some how,m there is usually a fee but worth it.
0 votes
Peter Reyes, Agent, Los Angeles, CA
Wed Sep 4, 2013
What is your real estate agent doing for you? He is the one that should be doing battle for you because he should have been on top of the loan and encouraged you to extend the lock in - if allowed; otherwise both your agent and the loan agent should have kept you informed. If you did not utilize an agent then this is the result of not taking advantage of a agent representation. There are many pitfalls that can happen, a ton of paper-work trail. Never go it alone. Feel free to call me if you have any further questions....Peter Reyes at 323: 356-2879
0 votes
I have an agent he is helping me out, the loan officer never informed us that there was an expiry on the lock. I am not sure if there is an expiry by default in which case my agent should have at least notified me,
Flag Wed Sep 4, 2013
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