It Takes Just 3 Words to Stop the Rate Lock Scam!

I know...   "What Rate Lock Scam?  Never heard of it."

The other day I gave you the power to determine if you were being Bait and Switched on your mortgage loan.   There was a lot to digest there.

Yesterday, I gave you the ability to look up a Loan Officer and determine if they are currently licensed in the state of California, for how long, and if they have any violations recorded against them.

FEELING EMPOWERED YET?

After today, you'll be able to understand a Rate Lock, why it's important, and know the one incredible scam nobody knows about.

You'll also have the power to defeat that scam with just 3 little words.

ARE YOU READY?

 

The Rate Lock Scam

That great rate you were quoted, was it based on the best day we had last week?
Is it for a 5 or 10 day lock period?

Did you know there are different rates for different lock periods?
The best rates are for the shortest rate lock periods.
The catch is that you must be able to close by the end of that lock.
How do you know your Rate is Locked?

Some Loan Officers will say you are locked, hoping to lock you later if rates go down and pocket the difference themselves!

Even if rates stay the same,
the lock period will be shorter and they'll still pocket the difference.

If rates go up, you lose.
The Loan Officer will come up with some excuse as to why your rate increased.
This is called the Pocket Lock Scam, it happens every day and the public never knows! 

Are You Locked? 

or Do You Just Think You Are?
Demand a Written Lock Confirmation

When a Loan is Locked

  • it's locked for a particular program,
  • at a particular rate,
  • for a particular loan amount,
  • for a particular period in time

When the lock is placed a Written Lock Confirmation is sent to the Loan Officer with all these details and much more.  Demand a copy of this.

DO NOT BE FOOLED!

Do not settle with a letter from your Loan Officer or Broker.
The Written Lock Confirmation will come from the Lender's Lock Desk.

  • If you get any hesitation at all - Walk Away!
  • If you see any hint of  White-Out or cut and paste - RUN AWAY!

Are you ready to Lock Your Loan ?
Mike@PatagoniaFinance.com or (925) 288-9977 Ext 104

Related Posts:  The 7 Deadliest Mortgage Mistakes

Get a Just 16 questions to a Real Rate Quote!
Up to the minute Mortgage Rates Report via Twitter
Check out "The Foreclosure Report" (It's help for homeowners in trouble!)

 

This post brought to you courtesy of Mike Mueller.
Feel free to ReBlog or ReTweet as you like as long as you credit the source (him).
Did you know?  He's for hire! He builds Blogs, Graphic Images and Widgets and Facebook Pages and besides… He knows lots of really cool stuff.

Hire Mike (925) 456-4567

 

are you following me? Are We Friends Yet? It's not just a Rolodex You've got to see this... Feed Your Reader
Like this post? Tweet It!

 

Did you know?

4 comments • Mike Mueller • May 29 2008 07:50AM

Comments

Mike, This is great info. "Pocket locks"!!! Man o man....what the heck is wrong with people? YO ar so right that the consumer needs to getthe lock in writing. And hopefully not just on a napkin!!!

Posted by Bryant Tutas-Tutas Towne Realty, Inc about 1 year ago

Bryant - Pocket Locks happen.  This isn't a new thing at all.

In the end one of three things happen.

  1. Rates dip sometime between Application and Funding allowing the LO to lock at the same rate quoted but with a larger "rebate".    The customer gets the rate he thought he was locked for (even though he could have ethically locked lower).  The LO pockets the difference in YSP.  Customer loves the LO.
  2. Rates stay the same between Application and Funding.  Because of the shorter lock period the lock is cheaper allowing the LO to lock at the same rate quoted but with a larger "rebate" again.    The customer gets the rate he thought he was locked for (even though he could have ethically locked lower).  The LO pockets the difference in YSP. (Option #1 and 2 are combined if possible for an even bigger effect!)  Customer loves the LO.
  3. Rates don't dip, they don't stay the same, instead Rates move steadily upwards!  The LO is in deep trouble.  His gamble has gone horribly wrong.  But he has a plan.  He calls the customer and explains something came up (usually it's the customers fault) and the new lock rate is __%.  The customer isn't happy - yet since it's his fault and it's so near the close of escrow he's got to accept the higher rate.  The LO doesn't make as much, the Customer may be disgruntled, but he thinks the whole problem was his fault.  Depending on the slickness of the LO he may even still love the LO.

it's no wonder this is such a secret.  I saw a Lock Confirmation that a borrower brought in that was "pieced together" from various other sources (it was a very poor cut and paste).  Since it was from a Lender I deal with I showed the borrower what a real confirmation should look like.  Upon seeing the difference the borrower was fit to be tied.  Turns out they were locked but the LO was trying to hide an extremely huge rebate!  (yeah that shows up too).  Nothing wrong with rebate as long as it's up front, honest and ethical.

Thanks for the comment!

The 7 Deadliest Mortgage Mistakes

Posted by Mike Mueller (Tech and Social Media Consultant) about 1 year ago

Hi Mike, great post. Liars quotes are and have always been a huge problem in our industry. I haven't made a habit of showing the lock confirmation, but this is taking transparency to the logical end, and I think it's a great idea.

Posted by Peter Thompson - Chicago Mortgage Insight (Wintrust Mortgage) about 1 year ago

Mike, I have a major issue, I have been in escrow since May 2, 2008, my closing for escrow has now changed for the 3RD time. I have a chdap lock confirmation date 05/22/08 expiring 07/22/08.

My lender has had me pre-approved for everything(supposedly) since before we even looked for a home. My fear is the newest closing date will past, agent said we won't close again in time, and I will lose this funding.

 

Any comments would be nice.

 

James

Posted by chdap funding lock about 1 year ago

This blog does not allow anonymous comments