Hello,

I was in the process of a VA Streamline Refinance(IRRRL) and my current Mortgage Specialist sent me an email saying that my rate lock expired today.  I locked in on 04/28/2009, so it's not yet been 60 days.  I was at the bank on Friday and this was never even mentioned.  What is also confusing to me is that he orginally said that my rate was locked at 4.75%,(I have several emails confirming this), but in today's email he said that my lock was for 4.875%.  Now, I am being told that they can only close my refi at 5%.  I have been very prompt in answering all of their questions and providing any documentation that they have requested.  There was never any delay on my part.  I have even left work on a couple of different occasions to take documents to them.  Why am I being penalized for their slowness?  Is this legal?  How is 5% available(when rates are higher now) but 4.75% is not? 

When I originally started working with this bank, the first Mortgage Specialist tried to charge me fees that I am not allowed to pay, per the VA.  When I informed him of this, he stated that he would have to increase my interest rate by .5%.  He is no longer with the bank and I am now working with a different Mortgage Specialist(that sent me the email today).  Should I just run away from this bank or is there anything I can do to save my 4.75% rate?

Thanks,

Cristy

Cristy,

You would have to review the documentation that you received regarding your rate lock.  If you didn't receive anything in writing, you are not going to have much to back up your claim.  The rate lock would specify the rate, discount points, and the time frame of the lock.

Locks are broken all of the time.  If your originator didn't plan for the actual underwriting turn times, you could break your lock.  Some lenders will allow for the lock to be extended by paying a fee.

You will want to check with your lender to determine what amount of discount points you may be paying to get a 5% rate and how much more it might cost to get 4.75%, if that rate is even available. 

Christy, this is outrageous for a VA IRRL loan...do you know why the loan has not yet closed, or what is the status for approval and close?.  Demand a copy of the rate lock that the lender would have in file.  Depending on the lock expiration date and when you will be able to close, paying an extention fee may be your best option.

Louis

Louis,

That was my opinion, too.  I thought they called it a "Streamline" Refinance for a reason. The only thing that they have told me is that the investors are "swamped" and loans are taking "forever" to close.  I never received a rate lock or any terms for the lock.  The bank did the lock as a "courtesy" due to the problems with the initial Mortgage Specialist.  I will request that information now.  The Mortgage Manager did call and email me today after I sent an email expressing my anger and mistrust of the bank.  Of course, I did happen to mention that I would be filing a complaint with the BBB and a local news channel reporter that investigates consumer related complaints.  The Mortgage Manager has requested that I allow him 48 hours to resolve this situation.  I am not sure how many chances this bank needs, but I am going to see what he can do for me.  If he can do something, why wasn't this done in the first place instead of just telling me the lock was expired?

Cristy

I think that I have finally gotten part of the truth from this bank.  After requesting the lock documentation, the Mortgage Manager called me.  Apparently, the lock was for 45 days.  I was unaware of the lock period.  The Mortgage Specialist let my rate expire and did not tell anyone.  When he went to re-lock the rate 4.75% was no longer available and he locked at 5.00%.  No one informed me of this until 2 weeks later, when the bank got the ok to close.  I had decided that I would go ahead and close at 5.00%, no points, because that is still better than today's rates for VA.  I was supposed to close today at 4pm and at 12:00, the Mortgage Manager sent me the HUD 1 and informed me that I needed to bring $1775!  He said this was due to the requirements for my escrow account.  Does any of this sound valid?  This is absolutely the worst experience that I have ever had with a bank.  Should I just say forget it and wait for the rates to drop again?

You could have added everything to the loan and  and paid initial interest and missed two payments. 5 is a good rate to close on today or next week.

Cristy,

It sounds like your loan officer has not educated you or kept you well informed during the process.  It's certainly possible that the loan amount is not enough to cover the cost of the escrow account, which would mean you'd have to bring in the difference.  If you had not wanted to bring cash to close than they should have made the loan amount higher, if possible in relation the lender's guidelines (and you should be able to go up to 100% LTV for a VA loan).

But you'll also be receiving the previous escrow amount in the mail after your first mortgage is paid off.  So that should make up the difference for what you're spending to open up the new escrow account.  You said you saw a copy of the HUD, has the lender fees changed at all?  I'm a little concerned that he sent you the HUD so soon before closing and had not mentioned before that you may need to bring cash to the closing.  So look at your original GFE that you signed and see if the fees have changed.

The process of buying or refinancing a home can be difficult and certainly stressful.  You might run into similar problems if you hold off and refinance later.  If you feel comfortable bringing in the $1775 and are saving a lot more money each month than I would advise closing the loan. 

The escrow setup is included on the loan.  That is why I don't understand how they say I have to bring $1775 to closing.

Can you copy and paste a copy of the HUD here?  If you have a copy of your original GFE than include that too.  That will help us figure out if you're being jerked around.

I am not able to paste either of the documents here.  They are both in PDF format.  I even tried converting to Word to no avail.

If you look at the second page of the HUD, you'll see the same names of the fees and in the same order that you see on the GFE.  Take a look to see if he has changed any of the lender fees, from line 801 - 820.

If those are the same than he probably just underestimated the other third party costs and the cost of setting up the escrow account.  If he had underestimated these costs and thus had a smaller loan amount than needed, you would need to make up the difference. 

Hope that helps, I'll keep checking in to see if you have any other questions.

Thanks, Scott.  There were several fees on the HUD 1 that weren't included on the GFE, but most of those are being paid for by the bank.  They are paying about $700 in fees, plus another $1000 to take my rate down to 5.00%(This is due to their previous mistake for lettting my lock expire).  Basically, do you think it is safe to work with this bank?  They have made many mistakes and have not been very upfront throughout this entire process.  I still haven't deciced to proceed with the closing at 4pm.  I would be saving about $150 month on my mortgage payment.

Are you sure they're paying for those fees on the HUD?  Or is that just how he explained it to you?  Without seeing copies of them I can't say for sure it's safe to work with them.  To give you a HUD a few hours before the closing and be that far off on the cash to close throws up some red flags.  But 5% and $150/month sounds pretty good so you'll have to base your decision on what it's costing you and how much it's saving you. 

You do have 3 days to rescind the offer after closing.  So if you close today, you'll have until the end of the day on Friday to cancel the loan.

Are we still talking about the VA IRRRL loan?

Two things:

1- If you had a 60 day lock on 4/28/09, that would leave you until 6/27/2009 to FUND the loan.  6/27 was a Saturday, so you really would have needed to fund by Friday, 6/26/09.  With a 3 day right of rescission, that means you would have had to close by 6/22/09, which is the date of your post.  So, I think that information is spot on.

2- On VA loans, the types and amounts of fees are pretty strictly controlled.  Basically, you can have government fees, title insurance, appraisal, credit report, and 1% of lender/broker charges.  To maintain compliance, many lenders will always list all their normal fees, even if they have to discount them.  Or, in the case of a brokered loan, the lender will charge the fee, and the broker will then pay it.

Without seeing the HUD/GFE, I can't say for sure, but I can say that it's not uncommon, particularly with VA loans, to see fees charged and also credited.

westy is correct though.  The main thing to pay attention to whether or not the deal makes sense for the cost.