We don't do official rate locks. However, internally management decided that the rate we quoted on the LE will be honored and is the same a customer will receive at closing for a loan product, even if that rate would happen to change internally for that product between when the LE was issued and the CD was issued.

However, if the product and corresponding rate changes, then the rate for new product disclosed on the CD is what we consider "date on which the Financial Institution set the rate for a final time before final action is taken".

We had an application for a 15 year fixed mortgage refinance secured by a mobile home and land on 9.21.2020. Due to a missing title and various other problems with liens, the loan was not closed until 6.2.21. The customer requested at product change and the CD dated 5.28.21 was sent out with reflecting 15/1 20 year mortgage instead. It just so happens that the rate for each of these products is 5%, both at the time the CD was prepared and back on 9.21.2020.

In practice, if the rate would have been different for the two products, we would have given the customer the rate at the time of the product change, not the rate according to the rate sheet back in 2020 when the LE went out.

So, I think that we should be using the date on the CD because this is the date the rate was set for the final time before closing. Is that correct?

Thanks in advance!

I would say that the rate was set for the last time when they changed products according to your policy regardless of whether it happened to be the same rate or not.

Your management is most likely going to have to revisit this policy as we get into a rising rate environment.