Is this Legal for lenders.

[Francisco Trejo]

Hello BP community, today i was notified by my loan broker that the rate on my loan just went up 5.75 on a cash out refi for a triplex here in L.A.  This is a no doc loan based on income from property.

I started this process with this broker back in middle of February. I locked rate with them for 60 days and loan officer assured that it wouldnt take that long to close.

Through this process i have been in constant contact with loan officer, i have been pressing him to close and everything has take what seems super long. Last month he told me we were scheduled to close April 15.  I started asking the week of the 15th about closing and he told me that the lender pushed it back to the 22nd.

He calls me today and tells me that the rate lock of 4.25 expired yesterday and that lender did not want to renew due to rates being higher. I guess my question is, is it legal for them to push loan to a later closing date , purposely to allow the lock to expire so that they dont have to honor that?

Just got me a little puzzled, now looking to change stratergy and not go through with refi.

Any input?

Thanks

[Chris Mason]

Unfortunately, this is fairly run of the mill for the DSCR and "alternative documentation" type loans.

When rates trend down, they extend locks for "free."

When rates are trending up, they find reasons to delay/etc, and will not extend rate locks.

There's no way around it, and the reason that direct lenders / bankers who dabble in brokering loans only of this type (the ones their employer doesn't want to touch, but at the same time wants to make their bankers happy) think brokered loans are painful is because these are the ONLY types of loans they're allowed to broker out (because the bank they work for doesn't want to touch them).

I do these types of loans once in a while, but I caveat/warn so much that most of the time people take their biz elsewhere. In fact OP you may have spoken to me 3 months ago (I wouldn't remember), and I would have told you in advance about how this sort of thing can happen, so you "shop around," find someone else offering exactly what I offered, from the exact same very small pool of lenders, identical rates/fees (+/- rate movement over time), they don't include all the caveats/warnings that I did, so you think it's more reliable or whatever, fast forward 2 months, and boom here you are making this thread (incidentally, this means my "incentive" is to just drop all the warnings and caveats, and then act all surprised when exactly what happened to you happens, like I didn't know it was a possibility from the get-go).