Lender increasing origination charge one week prior to closing

[Changrak Choi]

Hi, I'm writing to seek advice on the issue I have with my lender prior to closing.

I'm purchasing a duplex investment property in LA county, with closing on 1/24 (one week from now).

I've locked the rate with the lender on 12/14 for 45 days lock period (to expire on 1/27) for rate 3.5% with 0.15% point.

Everything progressed well with the loan till last Friday (1/14) when lender sent me CD with rate 3.5% with 1.05% point. (It is nearly $6000 increase in origination charge from what I've locked)

The lender is AmeriSave and it is conventional loan with 30% downpayment.

I've called/emailed lender and they got me back today saying the origination charge increased because the loan estimate when I locked was based on single family home, whereas I'm purchasing duplex.

Now, I have made it very clear to lender that I'm purchasing duplex investment property from the very beginning, both from phone & email communication. There are several proofs that can show this in the emails:

In the email exchange on 12/11, I clearly state I'm purchasing duplex investment property. In the email exchange on 12/13, I send the purchase contract that shows the property is duplex on the very first page. The appraisal report (ordered by lender) was completed on 12/23 and it clearly shows property being duplex in there. The lender asked for lease agreement of ALL units and I responded with copy of lease agreement of the front unit and said the back unit is vacant in the email. There is no way lender did not know the property is duplex.

I spoke with manager of the loan originator today. I told him of the discrepancy and forwarded him all the email exchanges that shows I have informed and the lender (loan originator) knew the property is duplex. The manager told me, he is very apologetic of the situation and he will do best he can, but $3000 is maximum offset credit he can provide. That still puts the origination charge $3000 higher than what I have locked in.

At this point, I'm not sure what I can/should do, so asking the gurus/experts of the BiggerPocket forum for advise.

The closing is in one week, so it is not possible to find other lender. The rate has gone up since 12/14 when I locked, so even if I find other lender, the rate will likely be higher. So practically, I feel I have no other choice but to pay $3000 more in origination charge from what I've locked and close.

But this seem very shady and unethical business conduct from the lender to be suddenly raising the origination charge in the CD by significantly amount only one week prior to closing, when they know I now have no other option. Had I known they are charging 3.5% with 1.05% point at the time of rate lock, I would have chosen other lenders who were giving me 3.5% with 0.2% or 0.3% point at that time.

Is there something I can do in this situation?

Thanks for reading through a long post and I would really appreciate any advices.

[Russell Brazil]

This is why the quality of the lender you choose is paramount. Too many people are in the mindset of chasing the cheapest rate and fees....but this is what happens when you do that...you end up with a subpar lender who missed a simple fact that the property was a 2 unit, thus having an interest rate premium, and not a 1 unit property. And when these mistakes are caught, its too late in the transaction to switch to a competant lender.