Hello, glad I found this forum,

My wife and I have been working with a mortgage broker for months.  We found a house and our Wells Fargo broker asked us if we wanted to lock in our rate at 4.25%.  We told him "yes" (over the phone), and felt great as we saw rates increase steadily since then.

Now, over a month later and close to our supposed closing, we received our mortgage commitment letter which does not have the line stating the rate is locked checked off.  We asked our broker about why it's not checked off last week and he said he had to check and get back to us.  It is now nearly a full week after and he still can not answer this simple question.

Rates are continuing to rise daily and we don't know what to do.  We don't know if our rate is locked and it was just a mistake in the paperwork, or if we should find another bank to deal with.  This is very frustrating and scary for us on our first house purchase.  Bills were going to be tight at the 4.25% rate, and rates are currently at around 5%.

I'm not sure what, if any, help you all can provide in this situation.  I just really needed to vent and our mortgage broker seems to be avoiding talking to us.......all while rates continue to rise and our closing date is fast approaching........

Any suggestions?

Thanks.

Hi AG,

Unless you see a lock commitment in writing, what you hear is not what you get.

Switching brokers at this stage may not be a good move.  Speak the broker and ask him to buy-down the rate for you or ask him to pay for all the closing costs.

Good luck.

Jacob Varghese

http://www.onewallstreet.com

http://www.bestcamortgages.com

Can you explain why it wouldn't be a good move?  At this point I can't stomach the idea of sticking with the bank, not to mention the broker himself..........

Unfortunately Jake is right on this one. Unless you got it in writing, it doesnt mean anything.

Now I'm not trying to get down on you in any way but what you wrote concerns me. "Bills will be tight at 4.25%"

That should set off some alarm bells. As in "can we really afford to buy a house right now". What if an emergency arises, do we have reserves to cover the bills? I understand your already close to closing on your home and congrats. But if you dont have reserves now, make a serious effort to build up atleast a few months for the "in case this...... happens" fund.

good luck & congrats!

AG
do you have anything in writing from the broker indicating he locked you in?

If so you may have something there to hold him to. if not I think the fact that he has not responded to your question on whether or not the loan was locked is a good indication that he failed to lock you in. Without any signed documenation its your word against his.

Going forward, when are you scheduled to close? do you have another 2 weeks to 30days to find another lender to work with and start over? If so, I would, why put money is this guys pocket if he messed up and did not lock you in.

2nd question, will the jump in rates now make this home unaffordable? Check with your realtor to see if you have a rate cap clause in your contract

Jeremy, we do have reserve funds to cover in case of emergency.  When I say "bills will be tight" I guess I mean compared to what we're used to without having a mortgage at all (this will be our first house).  Also, an extra 1% is about $200 a month on our mortgage.  That's a large unanticipated monthly expense..........

kcrute, we unfortunately don't have any documentation that we locked in our rate.  The strange thing (to us at least) is that all of our correspondence (even the Good Faith Estimate and later the Commitment Letter) state the interest rate is 4.25%.  It's just  the box indicating that the rate is locked is not checked.

We really don't intend to stick with the same broker, or even Wells Fargo, if he won't stand by his word that our rate would be locked.  We just feel swindled at this point......  I don't think we have a rate cap clause in our contract - I'll have to check, but I doubt it.

Glad to hear it.

I'm really surprised they didnt lock you at the time of the committment letter that you would've given to the seller.

swindled is a good word, if you did tell your broker to lock you in and he did not, he should be ashamed of himself and taken out to the woodshed.....

With no lock in agreement or written confirmation of the lock, maybe an email that says you locked?? otherwise it will be a hard case for you to prove

Even if the communication was not clear on whether or not to lock at 4.25 as rates started to rise he should have called you to lock in before we hit 5%!!!

sorry to hear about your experience

if he is a Retail Loan office, working for Wells, try to run up the ladder of management, if he is a broker try your SCC

He's a broker but works for Wells Fargo (Wells Fargo Home Mortgage).

Just got off the phone with the mortgage broker.  He admitted to his mistake (over the phone again) and offered us $1500 towards closing.  This is a joke.  His mistake is going to cost us a minimum of $30,000 at present value.  He says he can't really do anything better for us except maybe guarantee us a rate of 4.875%.

AG. the 4.875% is a good rate right now. getting the credit means giving up some of his pay. not a bad offer.  Just keep in mind your sales contract. do you have enough time to start with someone else? I know your sour, but is sticking it to them worth possibly losing the home? just a thought.

I dont think you'll be able to sell them on the $30k present value, since the average household refinances every 3-5 years. It's less then half a percentage that carry a 30 year mortgage the full term.

4.875% is an extra $150 per month.  I am actually even more sour that he only willing to give up his pay, while we foot the bill for his costly mistake.  I am waiting for a call from my attorney to discuss our options. 

I've heard the statistic of the average home owner refinancing every 3-5 years, but I'm not convinced that will be the case for a long time going forward as inflation hits and interest rates rise.  I mean, when is the next time banks will be able to borrow for close to 0%?

In about the next seven years when we go thru this all again. It all happens in cycles.

Can you say you wont have needs or exspenses in the next 5 years? No one knows, so rates never play an issue. People were still buying and refinancing homes when rates were in the high teens.

Inregards to your attorney. Is that inregards to your contract or if there's anything you can do about the rate lock?

In regards to our contract.  We need to find out whether or not we are even able to go with another bank.  The seller's attorney already has the Commitment Letter from Wells Fargo, so we're not sure if that can change.

The commitment letter does not keep you from going elsewhere.  Make some calls and see who can close your loan fast.

A few thoughts occurred to me in reading your question.   The first thing, I would like to say is the problem you have is with the BROKER not necessary Wells Fargo.  I am not here to Defend Wells Fargo, just wanted to point out an error (or miscommunication) on the part of your Broker is the Problem.   I would ask the Broker for copies of all the documents you signed when the application was started.  You (or legal counsel) need to review those documents. 

With respect to the 4.875% rate as being "A GOOD RATE" that may in fact be the case but without knowing at least credit scores, Loan Type and the Lenders Origination Fees I would not express an opinion. 

Lastly, I am not a fan of Adjustable Rate Loan, however when you discuss the loan options with another lender you might want to consider a 5/1 or 7/1 ARM.   With the recent rise in 30yr Fixed rates the ARM rates are attractive if there is any likelyhood that you may sell, move or refinance within the five or 7 year period. 

My advice is

1)  Review the Signed documents
2)  Review loan options from another Lender. 

OK, we just received an email from the sales manager of the branch.  Here is waht he is offering now:

"im on the phone with my pricing guy. here are some options. the 4.25% is not possible for 30 years. see below.
 
we can do what they call a buydown at no cost to you.
 
#1
we give you a rate of 3.875% for the first year and your principle and interest payment would be 1,880
and then for the next 29 years it would be 4.875% and the principle and interest would be 2,116
 
#2
the second option is we give you 3% for the first 2 years and the principle and interest payment would be 1,686
and then for the next 28 years we give you 5% and the principle and interest goes up to 2,147
 
we are paying for the buydown for the first and second scenario. we will not give you a lender credit anymore based on these options.
 
xxxxx, i understand your frustration and rightfully so. we are trying to make the situation right for you and your family.
 
please call me after you are done reviewing your options.
 
i personally like the 3% for the first 2 years. it gives you a nice cushion and lower payment that will offset the increase more. also keep in mind this is your first house and the likelihood is you will not be in this house for 30 years (statistically) but i understand nobody knows what the future holds."

I'm still sick to my stomach..........

I am happy that the lenders was agreed to the buy-down.  Please see my earlier answer.

"Switching brokers at this stage may not be a good move.  Speak the broker and ask him to buy-down the rate for you or ask him to pay for all the closing costs."

Go with the option you think is best, personally I feel if you are not planning to live in the house long then the 2nd option looks better.

Jacob Varghese

http://www.bestcaloans.com

The Loan Officer/Broker should be immediately terminated.  PERIOD!!  Of course, none of the so called "professionals" who responded to your question suggested that.  One of the "professionals" suggested that this broker should be ashamed??!!  F' all these banks and the scum that work for them.

BTW If you haven't closed yet you may just consider finding a good rental home and screwing the purchase, unless, you are willing and able to lose 10 - 20% of the homes value in the next 12 - 24 months.  Housing is not close to bottoming yet and anyone who tells you differently is either ignorant or a F'n liar.  Realtors and mortgage "professionals" fall in the latter category.

Happy New Year.....

As a loan officer for Wells Fargo I can safley say if you had any type of written correspondence via email or forms management would honor the rate lock request  . I use a Price Protection Agreement (PPA) .  The PPA is a part of the my initial package sent to all applicants.  I would check to see if it is in your documents and verify it was executed .   If it is verbal only between you and a retail employee there is not much Wells Fargo can do to meet your original request . 

Additionally,  Wells Fargo was offering free 90 days locks up to about 1 month ago and management was really pushing employees to get clients to execute on the offer ...

Also sounds like there is some confusion on if this is a broker or retail issue .  If the Loan officer works for Wells Fargo he is not a broker ... he is a retail employee working for Wells Fargo Home Mortgage .