Fannie REFI Closing Complications and Covid

[Jamie Atkinson]

Background: Currently doing a Fannie REFI on two duplexes (originally purchased 2013 at 5%).  Locked in at 4.25% for a no-cost refi.  Idea is/was to lower my P&I and improve cash flow, etc... 

Closing date next week.  Bank requested for me to set up my notary for Friday.  I live overseas, so that means setting up an appointment at the embassy (literally the only place I can go for a U.S. notary nearby).  Great.  Done it a bunch of times, no problem.  

Along comes Covid.  

Now, I'm being told that embassy services may or may not be available for non-essential services.  I'm plugged into the situation (my wife and I with State Dept.).  Bottom line, a good chance those services will not be available and I could miss my closing date (notarize documents Friday and Fedex back to the States.) Moreover, the whole country is in forced quarantine, with limited mobility.  Guidance changes everyday (more restrictions and closures).  

 Loan officer says, 'We don’t want to miss the closing date as the rate market for investment properties is not feasible. The existing rate can not be extended.'

What does that even mean?! My understanding is/was that on Fannie Refis, the rate lock is essentially a lose-lose scenario for the borrower.  In other words, if the deadline is missed and the rate goes up a 1/4 point, that's the prevailing rate for the new loan.  If deadline is missed and rate goes down, it stays at the previous lock.  Obviously, rates are trending downward, and I'm not trying to game the situation.  I'm more than happy to move ahead at the agreed-upon terms.  I just don't like the tone of the conversation, which implies that I'd better figure out a way to get this done, or else.  I've sent a couple emails basically saying, 'what are the next steps if this doesn't happen?' and have yet to get a response.  

What happens if I miss my deadline? I'm frustrated with the lender and part of me wants to say, the heck with it and just not do the refi.  What are my options?

[Tyler Rowland]

I think that the only way to get that done is by doing a power of attorney.  

As for the mortgage rates, the federal reserve has an influence on short term loan interests rates and loans with maturities that are less than one year, but do not have the same influence over mortgage rates.  That does not mean that the fed rate cut wont do anything to mortgage rates.  But it is anybody's guess on which way the rates will go.  Right now they are trending up.  

Lock extensions are pretty expensive, and every lending institution handles those lock extensions differently.  In this case, it looks like the lender does not allow for them.