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#1703358 - 05/25/12 02:49 PM Rate Lock
Tesla Offline
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Joined: Nov 2003
Posts: 3,687
Can someone confirm or deny this for me?

I believe a rate lock is when the borrower locks with the financial institution not when the FI locks with another FI. Is that right?

So in a secondary market situation, the bank secures a rate with the investor then "locks" with the borrower. Generally documented.

But for a portfolio loan, if the borrower and the FI are haggling over rates and the initial GFE went out with no lock, when the bank and the borrower agree on a rate, that is a "lock", requiring a new GFE. Right?

I thought I read that on here somewhere or the FAQs or maybe heard it a seminar, but I can't find anything to support my thoughts.
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RESPA
#1703369 - 05/25/12 02:59 PM Re: Rate Lock Tesla
RulesFollower Offline
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Posts: 185
I agree that the rate lock info that needs to be reflected on the GFE is between the customer and FI. The background business with secondary market lenders, etc. are not consequential to the customer. We have a rate lock agreement executed to keep with the GFE that went out reflecting the terms of that agreement.

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#1703392 - 05/25/12 03:26 PM Re: Rate Lock RulesFollower
Tesla Offline
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Posts: 3,687
Thanks. Do you think you just heard that interpretation somewhere too or is there something documented? As you can probably infer, I am getting push back on this. crazy
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#1703398 - 05/25/12 03:35 PM Re: Rate Lock Tesla
Truffle Royale Offline

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If the original GFE is issued as a float, FAQ p8 19) speaks to the fact that 'if a borrower locks the interest rate after the GFE has been issue, a revised GFE must be issued within three days....'

This is the only time RESPA dictates that a revised GFE must be given.

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#1703422 - 05/25/12 04:05 PM Re: Rate Lock Tesla
Dan Persfull Offline
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Dan Persfull
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Posts: 46,844
Bloomington, IN
I believe a rate lock is when the borrower locks with the financial institution not when the FI locks with another FI. Is that right? Yes.

So in a secondary market situation, the bank secures a rate with the investor then "locks" with the borrower. Generally documented. If the rate is offered to the consumer and they exercise a rate lock agreement/option, yes. If no agreement is exercised (the documentation you referred to) then no formal rate lock has been exercised by the consumer.

But for a portfolio loan, if the borrower and the FI are haggling over rates and the initial GFE went out with no lock, when the bank and the borrower agree on a rate, that is a "lock", requiring a new GFE. Right? No. There is a difference between agreeing to a rate and locking a rate. See the comments above concerning exercising a rate lock agreement/option.
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#1703435 - 05/25/12 04:23 PM Re: Rate Lock Dan Persfull
Tesla Offline
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Joined: Nov 2003
Posts: 3,687
Originally Posted By: Dan Persfull
I believe a rate lock is when the borrower locks with the financial institution not when the FI locks with another FI. Is that right? Yes.

So in a secondary market situation, the bank secures a rate with the investor then "locks" with the borrower. Generally documented. If the rate is offered to the consumer and they exercise a rate lock agreement/option, yes. If no agreement is exercised (the documentation you referred to) then no formal rate lock has been exercised by the consumer.

But for a portfolio loan, if the borrower and the FI are haggling over rates and the initial GFE went out with no lock, when the bank and the borrower agree on a rate, that is a "lock", requiring a new GFE. Right? No. There is a difference between agreeing to a rate and locking a rate. See the comments above concerning exercising a rate lock agreement/option.



So, on a portfolio loan, if we don't get a rate lock agreement, the rate is not considered locked for RESPA purposes and GFE is not required?
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