Lock-in Rates Legal Advice - Builder or Me

[a_yanez]

I'm building a house in TX. I signed a Contract of Sale with the builder last August. My concern with this contrac is the following statement: "SELLER TO LOCK RATE 60 DAYS PRIOR TO COMPLETION AT HIS OPTION". When I asked them about what it means, they explained: when the house is 60 day prior to completion they will contact the mortgage company to let them know so I can lock in.

I received a letter last friday from the mortgage company saying that the house is 45 to 60 days of closing and they were asking for all the rest of paperwork needed. So I called the mortgage company yesterday and found out that the interest rate was locked since Nov 16. So, the builder "apparently" contacted the mortgage company and the rate was locked on Nov 16. The builder nor the mortgage company contacted me about locking the rate. I never even received a letter informing me of this action.

The rate on Nov 16 was 7.75% with 2-points & 1% orig fee.
The rate today is 6.75% with 2-points & 1%orig fee.
This represents a lot of money these days.

I thought that locking the interest rate was supposed to be between the mortage company and me. Is there any regulations that protect me? Is it legal?

If I decide to get another mortgage company, does my credit get affected? (I haven't closed, only paid credit report fee).

All your inputs will be appreciated!

Thanks in advance,

Art

 

[HomeGuru]

Reject the first and lock now.

 

[David J. Miller]

I don't know laws in TX concerning locking-in but where I'm from the lender does not lock the loan without the permission of the borrower. A lock agreement must be executed by both parties. I'm not in the office today but will be tomorrow. I can contact a colleague and get some info. if you'd like. If you want me to follow-up, please post back.

What part of Texas are you in?

 

[a_yanez]

I'm in Dallas area, City of Rockwall.

Thanks in advance.

Art

 

[David J. Miller]

I did talk with my colleague. He could not elaborate on the laws, but he did say it is not customary to lock someone in without their consent. In other words, make the lender return the loan to float and re-lock at todays interest rates for FREE. If they refuse, fax a letter to them requesting they cancel your loan and get your financing somewhere else.