Lender changed rates because they weren't going to make enough

[Josh Matteson]

I'm currently locked into a rate in a new home mortgage. Today I was notified that they are no longer going to honor the rate because they are no longer going to honor the program that I was enrolled in. My rate jumped nearly .5% because of this and now I have no time to find a different loan. They are claiming that they will honor the standard rate from the time that I locked. However, that rate is .5% higher than any other loan I was approved for at the time. It feels highly unethical that they basically yanked the rug out from underneath me and put me in a position where I have no other choice. Any advice on how to move forward?

[Patricia Steiner]

A rate lock is a type of insurance sold by lenders to borrowers.  It allows the lender to 'match' funds to that rate.  However, if anything changes on your application or the rate lock period is exceeded, the lender does not have to honor the lock agreement.  Is a rate lock legally binding?  Unfortunately most lenders do not have a contract in place with the borrower for the lock so those few lenders who pull this stunt leave borrowers with only one recourse:  walk.  

If it were me, I would skip the lender and work my way up from his manager and higher - as long as you're in complete compliance.  Stay calm - but make it known that 'this is not the cruise you signed up for' and that you expected they would meet their commitments as you have met yours. There will be a lot of borrowers who will just accept this ploy and move on - and there will be those who don't and have the lock honored.  Be one of the latter.  Again, stay calm while communicating your expectation that the lender will act with integrity and honor your lock agreement.

Fingers crossed for you...(and congrats on your soon-to-be acquisition).