Someone has to do the dirty work
While scheduling a client’s refinance for closing this afternoon a small discrepancy in the final pricing became apparent when I received the lender’s Clear-to-Close (CTC). Contrary to a previous confirmation, the loan was now scheduled to cost the borrower, our customer who we treat like a client, more than expected.
At the end of the previous month we had to relock their loan due to the increased underwriting time frames that many popular lenders were experiencing. The original lock had expired.
Lender Mistakes are Rampant | Must Be Held Accountable
We looked at the floatdown provisions and the associated cost and determined that relocking “at worse case” was the thing to do. The phrase “at worse case” means that you can relock at the same terms as the original rate and price but that no improvement will be allowed by the lender even if the market has improved. If the market has dropped significantly enough to warrant exercising the floatdown provision, then a lower rate can be obtained in that manner. That wasn’t the case as we had locked on one of the best days in October.
The lender price error wasn’t huge at a quarter point, but that wasn’t the issue. It was wrong. And the discrepancy was going to cost our customer more money and that is not something I would want to happen to myself or my family. I immediately emailed our Account Executive and Loan Coordinator to notify them of the error. Finding the email confirmation for the relock which had the price terms listed in the email, I forwarded it to all interested parties.
My concern is that not every loan officer may have taken the time to initiate this objection and the intensive follow-up which will no doubt be required. As an example, the lender’s initial response was basically, please tell this loan officer why he is wrong.
You see, MetFund’s fee is fixed in advance and since the lender is paying the compensation there can be no changes to it under the Federal Reserve’s implementation of the Dodd-Frank legislation. It doesn’t matter whether the borrower is asked to pay more or not. Under the old regime, I would have just offered a credit to the borrower to offset the higher price. Can’t do that anymore.
So, there really is no incentive for a loan officer to fight for their borrower’s interest unless you really do care about your customer and “raise a fuss”, treating them as you would want to be treated yourself.
Over the past three years much of my working time is spent redirecting underwriters to commonsense techniques, interpretation and requirements, correcting errors made by pricing or appraisers and requesting and seeking scheduling preferences. You have to have someone on your side fighting for your interests.
I would like to think that those who call me their customer would do the same. As you would like to be treated, do the same for the other person.
This issue was resolved once the lender acknowledged their error. If attention wasn’t called to it, the borrower would have paid a higher price to secure the same rate.