Mike, This is great info. "Pocket locks"!!! Man o man....what the heck is wrong with people? YO ar so right that the consumer needs to getthe lock in writing. And hopefully not just on a napkin!!!

Bryant - Pocket Locks happen.  This isn't a new thing at all.

In the end one of three things happen.

1. Rates dip sometime between Application and Funding allowing the LO to lock at the same rate quoted but with a larger "rebate".    The customer gets the rate he thought he was locked for (even though he could have ethically locked lower).  The LO pockets the difference in YSP.  Customer loves the LO.
2. Rates stay the same between Application and Funding.  Because of the shorter lock period the lock is cheaper allowing the LO to lock at the same rate quoted but with a larger "rebate" again.    The customer gets the rate he thought he was locked for (even though he could have ethically locked lower).  The LO pockets the difference in YSP. (Option #1 and 2 are combined if possible for an even bigger effect!)  Customer loves the LO.
3. Rates don't dip, they don't stay the same, instead Rates move steadily upwards!  The LO is in deep trouble.  His gamble has gone horribly wrong.  But he has a plan.  He calls the customer and explains something came up (usually it's the customers fault) and the new lock rate is __%.  The customer isn't happy - yet since it's his fault and it's so near the close of escrow he's got to accept the higher rate.  The LO doesn't make as much, the Customer may be disgruntled, but he thinks the whole problem was his fault.  Depending on the slickness of the LO he may even still love the LO.

it's no wonder this is such a secret.  I saw a Lock Confirmation that a borrower brought in that was "pieced together" from various other sources (it was a very poor cut and paste).  Since it was from a Lender I deal with I showed the borrower what a real confirmation should look like.  Upon seeing the difference the borrower was fit to be tied.  Turns out they were locked but the LO was trying to hide an extremely huge rebate!  (yeah that shows up too).  Nothing wrong with rebate as long as it's up front, honest and ethical.

Thanks for the comment!

The 7 Deadliest Mortgage Mistakes

Hi Mike, great post. Liars quotes are and have always been a huge problem in our industry. I haven't made a habit of showing the lock confirmation, but this is taking transparency to the logical end, and I think it's a great idea.

Mike, I have a major issue, I have been in escrow since May 2, 2008, my closing for escrow has now changed for the 3RD time. I have a chdap lock confirmation date 05/22/08 expiring 07/22/08.

My lender has had me pre-approved for everything(supposedly) since before we even looked for a home. My fear is the newest closing date will past, agent said we won't close again in time, and I will lose this funding.

Any comments would be nice.

James