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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127777  
Subject: Re: Delays in Underwriting Date: 12/12/2001 3:38 PM
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Hi TDeF,

1) What commitments do the underwriters have and to who when it comes to getting their work done?

Their manager... that's pretty much it (trust me when I say it pisses the REST of us off too!)

2) What controls/measures are used to assure underwriters don't "manage the queue" to let certain loans (say those with high rates) go through readily while backlogging others?

There aren't any legal or regulatory controls to manage this. It is on a lender-by-lender management basis.

That being said, in the face of conspiratorial suspicions, I sincerely and highly doubt there is any such preferences given to loans with higher rates than loans with lower rates. If a rate is locked, the lender has already gone to the various bond markets to place trades to hedge the rate risks, so their correlative trades are profiting to make your lower rate loan equal to the later, higher rate loan that isn't hedged at such an advantageous bond position (did you follow that? Bottom line, a loan looks pretty much the same to a lender once it's locked at any rate or time.)

3) What controls/measures (if any) are used to determine what fees are charged for lock extensions due to underwriting's failure to manage their work queue?

When a lock expires the lender's hedging position is no longer sufficiently effective to protect them against rate risk. At that point you are allowed to re-lock at "worst case" pricing... meaning if rates got worse you get today's rates. If rates got better you get the OLD rates (unless you paid extra for a float-down option at inception.)

If you desire to re-lock at the previously lower rate, you would be required to pay the discount points necessary now to get the lower rate now.

My broker has assured me she's watching things like a hawk and checks with underwriting very regularly but that things are so crazy there (underwriting) that they won't even tell her where in the queue the file might be.

The broker's complaint is reasonable and likely. In the current state of affairs the busiest lenders have all but disallowed any direct communications with their internal underwriting staffs. The best brokers are forced to get more forceful, creative, and string-pulling.

Luck to you,
Dave Donhoff
Foolish Mortgage String-Puller

(And thanks, Jen, for the appreciation!)
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