When locking a mortgageA Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home. rate, you should know who’s responsible for missing a rate lock. Try to find a lenderA Lender is a person, company, corporation, or entity that lends money for the purchase of real estate. who will help with a mortgage rate lock.
By: Ilyce Glink and Sam Tamkin
Q: I am in the middle of completing a refinance of my home and missed my rate lock due to an un-recorded deed. As soon as this was discovered, I extended my rate lock but my rate was now .75 percent higher.
Shouldn’t the lender who failed to provide the service of recordingRecording is the process of filing documents at a specific government office. Upon such recording, the document becomes part of the public record. the deed be responsible for directly causing the missed lock and the resulting added expense between the two rates? I believe the difference between the rates will be about $17,000 over the life of my loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds... I feel the lender should cover this differential, as it was the company’s failure to file that will result in me paying significantly more for my refinance.
Your thoughts would be greatly appreciated.
A: We don’t think you have a strong argument in this situation. The real questions are who had the duty to record the deed and what duty did they owe you for that service?
Ordinarily, closings occur through closing or settlement agents or titleTitle refers to the ownershipOwnership is the absolute right to use, enjoy, and dispose of property. You own it! of a particular piece of property. insuranceTitle Insurance is insurance that protects the lender and the property owner against losses arising from undisclosed defects or problems with the title to property. companies. When you buy a home, the seller will deposit documents with this intermediary party that has the obligation to record and file documents, pay out funds and issue title insurance policies.
In some situations, homeowners decide to transfer title to their home when they refinance the property and these transfers may be for estate planning purposes; for example, where owners transfer title to their living trusts. In other cases, the transfers may be to add a spouse or other family member to the property’s title.
In each case, the title companyA Title Company is the corporation or company that insures the status of title on real estateReal Estate is land and anything permanently attached to it, such as buildings and improvements. (called title insurance) at a closing, and may handle other aspects of the real estate closing. or intermediary party may undertake that service as an accommodation but may not have any liability to you for their failure to record the document. Frequently, intermediary closing agents may not even charge for their service in recording the document. They simply take money that may be required by the local municipality for recording the document and bill you for it.
Now, if you requested of the title company or closing agentAn Agent is an individual who acts on behalf of a consumer. A real estate agent represents a buyer or a seller in the purchase or sale of a home. Licensed by the state, a real estate agent must work for a broker or a brokerage firm. An insurance agent helps a consumer purchase an insurance policy. Insurance agents are also licensed by the state. to issue you a title insurance policy in connection with the ownership change, the closing company undertakes to not only record the document but insure your ownership right to the property. If the company fails to record the document or some other title issue arises that affects your ownership rights, you would have insurance for these problems and a title insurance company to back you and assist you in resolving your problem.
Here’s what’s interesting: the issue you describe is not insurmountable. In fact, you should have had documentation from the time you either purchased the property or refinanced your home and had this deed recorded. Depending on your situation and the state in which you are located, the lender you were working with could have worked with the closing agent you previously used to have the document recorded or, in some states, issue a letter to the subsequent closing agent covering the issue to allow the closing to proceed.
Given these circumstances, your current lender may have been at fault in a delay in processing the documentation and finding out the problem relating to the “missing” deed early in the transaction. Had your current lender obtained the title report for your home early in your loan applicationYour Application is a series of documents you must fill out when you apply for a home loan, or insurance policies. process, the issue might have been resolved before your interest rate lock expired.
So, while the first closing agent caused the problem, it may not be the first closing agent’s fault that the second lender delayed in processing paperwork and getting documentation together to fix the issue or contact the first “lender” to get the issue corrected.
Finally, we always hear from our readers about lenders who should be held accountable for rising interest rates when loans don’t close on time. But it’s quite hard to actually pin “fault” with the current lender processing your loan.
When lenders blow their timing in processing a loan, it may be time to find a different lender to assist you in future loan refinances. And, if you close and find that interest rates head south again, you can always go through the pain of refinancing and locking in a lower rate down the line.