Friday, November 28, 2008
Mortgage Rate Locks, A Busy Week
This last week, by all lender accounts, has been an extraordinary week for loan application mortgage rate locks. Obviously, this is good news for consumers readjusting their mortgage payments and reconfiguring their cash flow. I'm also glad that many of the loan officers locking the files have decided to be so proactive on behalf of their clients.
Some of my clients called me Tuesday asking about rates and letting me know that they've received numerous calls from lenders. Some of the stories the lenders are telling these homeowners are a bit obnoxious i.e. "You qualify for the new government program", "rates are 5.5%" (without knowing the borrowers fico), "He told me he could get my house appraised for $250k" (a michigan lender not familiar with Illinois). There is probably a lot of Hail Mary rate locking going on right now.
Its not just the cold call pitches that are interesting. Its also the sheer volume of loans being locked that I can't believe have an application at the brokers office. Its hard for me to believe that these loans were sitting in que ready to be locked. I have to imagine that most of these locks, probably about 70% of them were advance locks on cold calls prior to receiving a loan application. Now the paperwork chase starts.
I'm a little skeptical at the activity and the effect of this inefficiency. The direct lenders may see a great deal of lock fallout due to issues such as appraised values or "rates that suddenly change" for the borrower due to the new loan level pricing adjustments. Stay tuned...
