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Consumer Assistance/Outreach & Education
Rate Lock Information
Historically, there are many times when Virginians see record low interest rates and consider a refinance of their mortgage loans. However, when home mortgage rates fluctuate, some consumers are finding that their promised rates are not locked in after all.
Whether consumers refinance their mortgages to lower monthly payments, decrease the term of the loan, or take out some of their equity in the form of cash, many learn late in the process that their interest rate or points are going to be higher than they were originally told.
In rising rate environments, the State Corporation Commission's (SCC's) Bureau of Financial Institutions will receive consumer complaints and questions regarding this issue against companies licensed under the Mortgage Lenders and Brokers Act. Some complaints stem from a mortgage lender's or broker's refusal to honor a lock-in promise, which causes the consumer's interest rate or points to be higher at loan closing than what the consumer was told at the time he thought that he had "locked in."
The SCC has defined a lock-in agreement as "a written agreement between a mortgage lender, or a mortgage broker acting on behalf of a mortgage lender, and an applicant for a mortgage loan that establishes and sets an interest rate and the points to be charged in connection with a mortgage loan that is closed within the time period specified in the agreement." This time period is referred to as the lock-in period. Lock-in periods average 30-45 days, but may be shorter or longer.
Sometimes consumers must pay a lock-in fee in order to lock in the rate and points. The SCC's regulation applicable to licensed mortgage lenders and brokers requires that if a lock-in agreement is issued in connection with a Virginia mortgage loan, it must be signed by a representative of the mortgage lender or mortgage broker acting on behalf of the mortgage lender, and include certain information, such as the name of the mortgage lender or broker issuing the agreement, the interest rate and points, the amount of any lock-in fee and the terms under which it would be refunded, the length of the lock-in period, and a statement that if the loan is not closed within the lock-in period, the mortgage lender is no longer obligated by the lock-in agreement.
Virginians need to be aware of some pitfalls related to lock-ins.
The most common one occurs at the time of application when a mortgage broker or lender verbally promises to lock in the consumer's rate and points. Although Virginia law does not require mortgage lenders or brokers to issue lock-in agreements, the Bureau of Financial Institutions encourage consumers to always obtain a lock-in agreement. The terms of a written lock-in agreement are typically easier to prove and enforce than the terms of an oral agreement.
Some consumers have indicated that they learned from their mortgage lender that the mortgage broker, while having represented to them that their loan terms were locked in, never locked in the promised rate with the mortgage lender. Under the SCC's regulations, a mortgage broker is prohibited from issuing a lock-in agreement to a consumer unless the mortgage broker has actually locked in a mortgage loan, including the applicable interest rate, points, and other terms, with a mortgage lender.
Another common pitfall is that a consumer's lock-in period expires prior to the closing of the loan. Any lock-in period should be long enough to allow for settlement, as well as the handling of any other factors that might arise that would delay settlement. Consumers should verify with their mortgage lender or broker the average time it is currently taking to process and close a mortgage loan. When demand for mortgage loans is high, processing times increase and a longer lock-in period may be appropriate.
While the actions or inactions of a mortgage lender or broker may cause a lock-in period to expire prior to loan closing, delays are occasionally caused by borrowers who fail to furnish required documents to the mortgage lender or broker in a timely manner. After a lock-in period expires, mortgage lenders may be unable to offer the same lock-in terms because they can no longer profitably sell the loan to investors based on such terms. Lenders who keep their own loans have more flexibility with rates after the lock-in period expires.
In some cases, consumers may need to consult with an attorney to help determine contractual rights under a lock-in agreement. Of course, consumers may also contact the appropriate state or federal regulatory agency that regulates the mortgage broker or lender. If there is a lock-in agreement and a lock-in fee was paid, the borrower may be entitled to a full or partial refund of the fee. This will depend in large part on the language of the agreement. Always read the fine print in any agreement.
In summary:
- Always obtain a written lock-in agreement.
- Carefully read the lock-in agreement prior to signing it.
- Be sure the lock-in period is adequate for current market conditions. Keep in mind that a very active market increases the time it takes to process a loan.
- Submit all information requested as expeditiously as possible.
For additional information, contact the SCC's Bureau of Financial Institutions by calling toll-free within Virginia at 1-800-552-7945 or in Richmond at (804) 371-9657 or visit our website at scc.virginia.gov.
Disaster Readiness
Before the Storm
- Create a detailed inventory of your belongings. Include photos and receipts of your property if you have them. You can use the Inventory Checklist as a guide.
- Review your insurance policy and contact your insurance company if you have any questions about your coverage. You can find your insurance company’s phone number using our Company Lookup.
- Store your home inventory checklist and insurance policy information in a secure, waterproof location.
- Most homeowner’s and renter’s insurance policies do not cover losses due to flooding. Talk with your insurance agent about flood insurance or visit the National Flood Insurance Program website.
- If your home or other insured property was damaged during a storm, contact your insurance company or agent as soon as possible.
- Take photos of your damaged property once it is safe to do so.
- Save the receipts of any emergency repairs that are needed to prevent your property from becoming further damaged.
- If you feel you are treated unfairly, please contact our Property & Casualty Consumer Services team at 804-371-9185 or file a complaint online.
Helpful Resources
- InsureU Disaster Preparedness Tips and Guides
- National Flood Insurance Program
- Virginia Department of Emergency Management
- Ready.gov
- When a Disaster Strikes: What to Do After an Insured Homeowners Loss
- Mobile App: When a Disaster Strikes: What to Do After an Insured Homeowners Loss Size: 1.5MB (provides offline access)
- When A Disaster Strikes: What to Do After an Insured Commercial Property Loss
- Mobile App: When a Disaster Strikes: What to Do After an Insured Commercial Property Loss Size: 1.5MB (provides offline access)
We are here to help. If you have general insurance questions or trouble getting your claim paid, our team of specially trained representatives can assist you.
- General insurance questions – 804-371-9741
- Property & Casualty consumer complaints – 804-371-9185
- BureauofInsurance@scc.virginia.gov
- File a complaint online
Consumer Resources
Mortgage Loan Information
- Information to Know About Mortgage Rate Locks
- How to Manage Your Mortgage If Your Lender Closes or Files for Bankruptcy
- When Paying the Mortgage is a Struggle
- CFPB: Buying a House: Tools and Resources for Homebuyers.
- CFPB: Cómo preparar sus finanzas antes de comprar una casa.
- Interest-Only Mortgage Payments and Payment-Option ARMs -- Are They for You?
- Reverse Mortgages
- CFPB – Considering a Reverse Mortgage?
Cryptocurrency
- What to Know About Cryptocurrency and Scams
- Notice to Virginia Residents about Virtual Currency
- FDIC Fact Sheet - FDIC Insurance and Crypto Companies
Debt Counseling / Debt Settlement / Debt Collection
Deposit Account Information
- What is Check 21
- Deposit Account Basics
- FDIC Consumer News
FDIC Consumer News provides practical guidance on how to become a smarter, safer user of financial services. Issues and selected articles offer helpful hints, quick tips and common–sense strategies to protect and stretch your hard-earned dollars.
Student Loans
- State Council of Higher Education for Virginia (SCHEV)
The State Council of Higher Education for Virginia (SCHEV) is the Commonwealth of Virginia’s coordinating agency for higher education. As an entity of the Commonwealth of Virginia government, SCHEV exists to serve the public interest and to assist the state’s system of higher education. - SCHEV - Student Complaints
If a student has exhausted the avenues provided by the institution and the complaint has not been resolved internally, the student can submit a “Student Complaint Form” to SCHEV. - Public Service Loan Forgiveness (PSLF)
Temporary changes by U.S. Department of Education available through October 31, 2022
Additional Resources about Public Service Loan Forgiveness (PSLF) - Student Loans
Whether you are preparing for college, attending school, or already repaying your student loans, see the CFPB tools and resources to help you make the best decisions for you. - How Student Loans Work and How to Avoid Scams
- How to Avoid Scholarship and Financial Aid Scams
Free Credit Report, Credit Freezes and Fraud Alerts on Credit File
- Free Annual Credit Report is the only source authorized by Federal Law
www.annualcreditreport.com/index.action - What to Know about Credit Freezes and Fraud Alerts
www.consumer.ftc.gov/articles/what-know-about-credit-freezes-and-fraud-alerts - Free credit freezes are here
www.consumer.ftc.gov/blog/2018/09/free-credit-freezes-are-here - Identity Theft - Report Identity Theft and Get a Recovery Plan
www.identitytheft.gov/#/ www.robodeidentidad.gov/#/
