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Reprice Loan if Rates Lower Before Processing

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Our VP of Lending wants me to draft an agreement for our clients stating that we will charge a $500 fee to "reprice" their mortgage loan if the rates go lower during the processing of the loan (before the loan closes). For example, they have a 4% rate and now rates dropped to 3.5%, we will charge them a $500 fee to lower the rate from the 4% to the 3.5%. The rationale is that we might lose them as a client if we don't lower the rate, but need to charge the fee for our costs. I am not comfortable with this from a Fair Lending perspective and am not sure if this violates other regs.

It violates no regulations that I know of, but only your legal counsel should be drafting such an agreement.

First published on 9/10/12

First published on 09/10/2012

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