[Mary Frances]

We do hybrid secondary market loans that close in our name. On our rate lock agreement, that the borrower signs, states “All relocks will be subject to a minimum relock fee of .250%”. If the rate lock expires some mortgage investors charge the .250% rate lock extension fee and some do not charge the fee. What is the best practice of passing this fee on to our borrower?

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[rcooper]

Can you clarify what you are specifically needing to know?

[Mary Frances]

Since only some of the mortgage investors we use charge the lock extension fee we do not want to have any fair credit issues by having our loan officers charging the fee when we are not charged by the mortgage investor. Even though the borrower signs a rate lock agreement stating “all relocks will be subject to a minimum relock fee of .250%”.

[rcooper]

It seems the simplest thing is to charge the fee only when it his charged by the investor. That eliminates the “why are you charging/retaining rate lock extension fees on some loans but not all” question. Where did you get your rate lock agreement (forms vendor, investor, in-house doc, etc.) and can you make changes to that wording “will” to “may”? As with any change, I recommend ensuring your forms vendor or investor allows for the change and if it is an in-house form having it reviewed by counsel.

[Mary Frances]

Thank you Robin. We’ll look at the wording on the lock agreement form I believe it is something we can update ourselves.

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