Some lenders offer a "lock n shop" program by which a borrower can get a preapproval and lock a rate prior to having a property address and thus triggering disclosures. A client of mine is looking to implement such a program but has mentioned that Well Fargo has taken issue with this practice as of late and not allowing this. I have no idea what specifically the issue is they have.

Im sure there are state laws to take into consideration and I am going to assume the rate locks are being honored.

Other than those two issues, is anyone aware of what compliance risks might be associated with this practice or any law/rule which would prohibit this?

Investors are not going to be too excited about loans that show charges to the borrower prior to an "intent to proceed". I doubt that the regulators will either.

You cannot lock a rate on secondary market without a property address. What a bank can do with it's in-house loans is out of my line of experience.

If there aren't any fees charged before the property address is located and therefore the LE provided, I don't see any issues with this. We've had a lock n shop program for a while now and have not received any regulatory scrutiny.

Does anyone know if we could (or should) provide a rate lock agreement once the rate is locked on an in-house preapproval?

How would you lock a rate without a rate lock agreement?

John hits the nail on the head. Anymore you have to have an agreement to have a 'lock'. That's not to say you couldn't honor whatever you quoted, but it won't be 'locked' without an agreement.