“Call me when you have a good deal.”
(I.e., “40% undermarket with a seller carry back”)

That’s the line many new(er) agents get; they get brushed off by a faux buyers.

It’s similar for MLOs, and if you stick with me for 20 seconds, I’ll reveal how lenders prioritize their pipeline; then I’ll cover rate lock strategies, all in 90 seconds.

RE agents and MLO operate on similar priorities.
“No one gets paid until the transaction closes escrow.

MLO prioritizes their “pipeline” with two specific priorities in mind.

1) Which buyers are most likely to close with the shortest timeline?

For example, if a buyer is sloppy with paperwork and has a lackadaisical attitude when the MLO follows up, the application is often “de-prioritized” until the borrower(s) show more commitment.

2) What is the likelihood that the agent will refer more clients to the MLO?

“Some people would complain even if  hung with a new rope.”

Certain transactions are complicated, and buyers are even worse. Both agents and lenders keep their heads down and their mouths shut, knowing the transaction is a “one-off.”

Here’s something most MLOs won’t confess to.

“WAY, WAY, WAY BACK

If an applicant is”shopping” 3+ lenders (as per the credit report), that buyer’s application goes to the back of the line. “Just Saying”,

We all have better things to do. 

What Happens if a Rate Lock Expires?

Rate locks are for set periods of time, e.g., 15, 30, 45, or 60 days.

If a transaction is not closed before that set period, the lock expires.

When a lock expires, borrowers have four options:

1. Pay to “extend the lock.*

*Paying to extend the lock is very cheap if it is only a day or two, e.g., 0.02% of the loan amount per day.

But that can add up quickly and get expensive if lock extensions exceed a week. There are also limits to how long someone can extend a lock.

2. Re-lock their rate with “new pricing.”

that is usually higher (if the transaction is heading south while rates are climbing.

Different lenders and investors have different lock extension policies.

**Re-locking with “worst case” pricing means that borrowers can just lock their rate in again, but they will have to take whatever rate is worse: the rate they initially locked in, or the current market rate.

Hence, if rates improved since borrowers initially locked, borrowers will not be able to take advantage of that improvement by re-locking; they will be stuck with their original rate.

3. Wait 30 days

And re-lock at the market rate (if rates are declining)

4. Change Lenders

Changing lenders is problematic, especially if you have applied to an institutional lender.

a) Borrowers who apply at credit unions and banks typically have to cancel their loan application and begin the process all over again.

b) Borrowers who have applied with “loan brokers”  have their MLO cancel the file with the current “wholesaler” and move the loan package to another.

A typical loan broker has access to up to 30 wholesalers but works with (typically) 3-5 that they have confidence in.

Applicants applying for FHA and VA loans will experience a 1-2 day delay, as both will need to transfer the current Government case number to the new wholesale lending source.

5) What about “rate roll-downs

Most lenders offer rate roll-downs, meaning borrowers can lower their interest rates if rates improve.

BUT – for a roll-down to work, rates have to improve significantly (over ¼%), and there are fees involved, so even the best “roll-down” options do not allow borrowers to “roll down” to current market rates.

The best case is about 2/3 of the way to the current market.