Lock Confirmation and Fee Creep
A New Hampshire borrower applies to a licensed mortgage broker for a $320,000 rate-and-term refinance of a primary residence. The loan officer quotes 6.25% on a 30-year fixed, says "I'll lock you for 45 days," and collects a $750 application fee plus a $450 "rate-lock" fee. He gives the borrower a one-page fee sheet listing a $3,200 origination fee and an $895 processing fee, but it does not list third-party lender fees, title, or appraisal, and it does not state the lock expiration date or whether the lock is transferable. Thirty days later the loan officer says the lock "expired" and the rate is now 6.625%; closing costs are $1,200 higher. The borrower asks for copies of the lock confirmation and fee disclosures.
1. What New Hampshire disclosure and consumer-protection issues does this fact pattern raise?
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The central issue is whether the borrower received accurate written disclosures before paying fees and before the rate was locked. A one-page fee sheet that omits lender, title, and appraisal costs does not give a realistic picture of closing costs. Charging a separate rate-lock fee without documenting the lock term, expiration, rate, points, and transferability is misleading. Saying "I'll lock you for 45 days" and later claiming expiration requires a written record; otherwise the borrower cannot verify the terms. Under RSA 397-A and the Consumer Protection Act, mortgage brokers must not make false or misleading representations about fees, rates, or lock terms. The later $1,200 increase may be legitimate only if it was properly disclosed and caused by third-party costs, not by an undisclosed change in the broker's own charges.
2. Is the lock enforceable, and what should the broker produce?
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Enforceability depends on what was actually documented and communicated. If the broker obtained a 45-day lock from the lender and failed to give the borrower written confirmation, the broker should not benefit from its own poor documentation; the borrower has a strong argument that the quoted lock should be honored or that the lock fee should be refunded. If no lender lock was ever obtained, the "rate-lock" fee was not earned. The broker should produce the lender lock confirmation, the complete fee worksheet, the application, all disclosures, and a transaction log. The broker should reconcile the $1,200 increase line by line. If the increase includes undisclosed broker fees, those should be removed; if it is a valid third-party increase, it should be re-disclosed with supporting invoices.
3. What remediation should the broker consider?
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The broker should promptly provide copies of all disclosures and lock documents, explain the rate change in writing, and correct any inaccurate fee sheet. If the lock was not properly documented or the lock fee was unearned, the broker should refund the $450 and consider honoring the original rate or re-locking at no additional cost. The broker should also review whether the loan officer's practices are systemic, retrain staff on lock disclosures, and preserve records for the Banking Department. A refund alone does not cure a misleading disclosure pattern; the broker should fix the template and the script. If the borrower suffered a higher rate because of the broker's error, the broker should evaluate a rate concession or other make-whole remedy.