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#2266883 - 02/25/22 03:53 PM Extended Rate Lock
Amy Offline
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Joined: Sep 2017
Posts: 18
We are considering extended rate locks in this rising rate environment. The investor requires an upfront 1% fee that we would pass onto the borrower and that fee refunded to the borrower if they close the loan. If the borrower is denied they would also get their fee back. If they withdraw the fee is not refunded. We would charge the 1% fee on the LE and provide a corresponding lender credit. There is some concern this would be a fair lending issue. I cannot find evidence that it would be, can anyone confirm that?

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Fair Lending
#2266896 - 02/25/22 05:07 PM Re: Extended Rate Lock Amy
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
What fair lending concern do you have? Do a certain class of individuals withdraw more than others? Will you not have a rock-solid agreement in place in your written lock agreement which outlines the requirements to be rebated this fee?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2266899 - 02/25/22 05:42 PM Re: Extended Rate Lock rlcarey
Amy Offline
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Joined: Sep 2017
Posts: 18
The concern is when we don’t charge this consistently, there could be questions on why would you charge some applicants and not others. For example, a good borrower that withdraws and the lender decides to waive the charge and refunds the money to this borrower who withdrew but we didn't refund for other borrowers. Procedures would state that we do not refund on any withdraw files.

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#2266903 - 02/25/22 07:02 PM Re: Extended Rate Lock Amy
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
Yes - that would be a problem. If you institute a fee like that, there can be no waivers.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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