Can a bank enforce a mortgage lock-in 3 weeks after agreeing to and closing on a lower interest rate?

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Can a bank enforce a mortgage lock-in 3 weeks after agreeing to and closing on a lower interest rate?

We refinanced our home. Signed a lock-in rate of 5% in April. When we went in to close on the house – they said “Congratulations! We lowered your rate to 4.75%” We agreed and signed the closing papers with the new 4.75% rate. Almost 3 weeks later they called and said they messed up and we can’t do 4.75%.It seems to me the transaction was complete with the new contract terms when the documents were signed. The newer agreement by both parties should make the old agreement null. ??

Asked on June 8, 2009 under Real Estate Law, Iowa

Answers:

R.S.T., Member, NY Bar / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

I don't practice in your home state. But I would believe that if you indeed closed on the refinance with that lower rate and all parties signed on, then that is the rate that will be applied.  But that is only if you closed.  If they offered you a lower rate and you filled out some papers to get the ball rolling than that is a different story.  I would re-examine those latest mortgage closing papers, see if there are any loopholes that might exist, and if in your reading none do, then i would contact an attorney immediadetly. 


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