What to do if I have trying to refinance for 3 months and the rate had been locked in but now, 2 days prior to closing, I’m told that the rate can’t be honored?

I have been refinancing for 3 months with a financing company for a VA loan. I chose to “lock in” 4.25% with 3.5 points; I chose a higher amount so that I could get points to cover the closing expenses and etc and have cash back. I have a good faith estimate and a truth in lending disclosure statement along with other paperwork that has been sent to me to sign and send back. After all of the paper work that has been submitted, the home loan appraisal, water testing and etc and two days prior to closing the paperwork I have been informed that as of 6 weeks ago VA will no longer allow a “cash out” to cover expenses. The company has offered to cover closing expenses and to drop my rate 1/8%. I have explained to them the whole reason I chose the 4.25% with points and waited the 3 months it took them to finish the loan (because they have been behind). I do not feel I should be penalized for a rate they offered and locked in and now can not honor. Is there anything that I can do legally?

Asked on August 2, 2012 under Real Estate Law, Washington

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If your rate is locked in and the lender is not willin to honor the terms and you are pressed to close escrow but have to accept a higher rate due to time constraints, I suggest that you consult with a real estate attorney as to your options.

My gut feeling would be to close escrow under the new terms under protest and then make a claim against the lender to re-write the loan at its cost. If it will not under the original locked in terms, your recourse is to file suit against the lender.


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