Getting Rate in Writing Is No Guarantee

Robert Bruss’ Real Estate Q&A; column of July 2 fielded a question from a reader whose mortgage broker had “locked in” an interest rate of 7.75% on a refinance, only to stall long enough for that “rate lock” to expire (“Rate Lock-Ins Should Always Be in Writing.” This is evidently extremely common; it happened to us as well, last year.

In our case, we did obtain the rate lock in writing, as strongly suggested a year or so ago in a column by Jack Guttentag. The documentation was curious, however, in that the company name on the letterhead of the rate-lock document was that of the mortgage broker, not that of the ultimate lender. Our rate lock expired, in spite of our having the documentation, due to no delays of our own. The broker merely said that the lenders were swamped with re-fi applications.

Our present understanding is that a reputable broker will supply the rate-lock documentation from the lender (on the lender’s letterhead). If the rate lock expires due to circumstances other than delays caused by the applicant, the lender is obliged to extend the rate lock indefinitely until the lender is able to process the application.

Bruss answered the reader’s question offering the remedy that the borrower(s) should have obtained the rate lock in writing. In our experience, as illustrated above, this would not necessarily have prevented what happened. I thought your readers might like to know.

VICKI PARIS GOODMAN

Long Beach