Waiting to lock until after appraisal is in?

What are your thoughts about not locking in a rate until the appraisal is in?  One of our investors is strongly suggesting it (I had to cancel a lock with her today because the appraisal came in low - first cancellation I've had with this investor).  I understand the logic of it, it certainly makes sense.  But when rates are on the way up,...

What do the rest of you do?

There is no easy answer to your question.  The issue all brokers now face is meeting the lenders expected pull through ratio.  The lender doesn't care why the cancellation took place they figure the cost to them for hedging and at a certain point they make a business decision that they aren't going to continue the relationship if the pull through ratio isn't there.  A small broker is particularly vulnerable if they have limited volume.  So you have to decide when you will allow borrowers to lock and if they aren't comfortable with it then pass on the loan because it might jeopardize your future relationship with this lender, if that relationship is important to you.

You're right Bryan, if we're going to keep a good relationship with the investor we're going to have to adjust the way we think about each loan.

Thanks for the input.

I explain to my customers the dilemma I face when they want to lock before having the results of the appraisal.  I also know which lenders don't care about fallout due to things beyond our control.  If value is a major factor in my ability to deliver the loan, I will not lock until we have the appraisal in hand with a lender that will count that reason as fallout.

When the customer has the information, they can make the decision.

Thanks Kent.  I believe I will need to start working this way - especially in this market.