Countrywide $435 Lock in rate fee...?

Question

Is this legal? They asked me to pay $435 to lock in the rate. Countrywide appraised our house 50K lower than what we purchased it for 2 years ago. In short, Countrywide did not refinance our home. Now, i cannot refund the $435. Is this legal practice?

Answer 1

What you are being asked to pay is not actually a 'lock in fee', but you are being asked to pay their costs in processing your application and attempting to get you qualified for a refinance. The largest portion of this fee is the cost of having the property professionally appraised by a certified appraiser.

I'm not sure where Mary B gets her information, but it's pretty standard practice to require the borrower to pay for such costs, even if the loan isn't granted. Check the application which you signed. You will find that you agreed to pay for such costs even if the mortgage doesn't go through because of a low appraisal.

Think about it. Should Countrywide eat the costs of appraisals because your property devalued ? It's not THEIR fault that your property values declined.

Answer 2

No it's not, because it's not your fault the transaction didn't close.

They can charge you a lock fee, but if it doesn't close, they have to pay it back to you.

As a COURTESY, they should also refund you back the credit report fee and appraisal fee.

I would call your loan officer back and tell them that you will file a complaint with the banking commission of your state if the fee is not refunded.

It costs them NOTHING, when a rate is locked, and a closing doesn't happen.

To Acermill: The question above referenced a lock-in fee, not an application fee/appraisal fee. I have worked with Countrywide on loans in the past, and they DO NOT lump these costs...nor are they called anything else internally. So THAT is where I am getting my information from.

Countrywide will also refund the cost of the credit report and the appraisal, upon request (but you HAVE to request it), and the branch will absorb the costs....they do this so you will consider them for business later.

How do I know this? Because Countrywide is one of my preferred lenders that I send clients to for buying and refer clients to when they want to refinance...I also used to broker loans out to them, so I am VERY familiar with their practices.

Countrywide also uses automated appraisals for many of their products.

A good loan officer will have a good relationship with several appraisers and will get one of them to "ballpark" a property prior to taking a borrower's money...this is done all day, every day in my market...why do appraisers do this? Because if you send them enough business, they will extend the courtesy.

That is the difference between a good loan officer and an inexperienced fly-by-nighter.