Aggressively defend your rate lock -- page 2

That was kind of weird, considering that he had talked to the loan officer seven times on June 30 and July 1. Zarrow says he would have paid the fee if it had been disclosed at the time because rates had risen at least half a percentage point. Zarrow suspected that the mortgage company was at fault for the loan's tardiness. If so, why should he have to pay?

So he talked to the mortgage company's vice president of finance, who waived the fee. He says his neighbors report having similar problems with the mortgage company, but "they did not pursue it with management."

They should have done what Zarrow did.

"The best thing for any consumer to do is stay in contact with the person who's doing the loan for them," says Raymond Michaud, a mortgage broker who owns Mortgage Center of America in Trumbull, Conn.

Between application and closing, underwriters often request additional paperwork from the borrower. Make that a top priority. Keep all correspondence, and back up phone calls with e-mails that summarize what was said.

A busy broker or lender might not like it if you call every week to get an update on the progress of the loan, but frequent calls are a good way to protect yourself. The lender is more likely to expedite the loan just to keep you satisfied and prevent you from calling even more often. And if the lender says the appraisal or title company is dragging its feet, call that business to raise hell.

Don't pester, but don't lie down like a doormat, either.

In the last week or two before the rate lock expires, it might become clear that you're not going to be able to close on time. Some lenders might be willing to extend the rate lock, Michaud says. In some cases, a three- to five-day extension might be free. A week's extension might cost one-eighth of a point. None of this is written in stone; all is subject to negotiation.

If, despite your best efforts, the rate lock is broken, you must continue to negotiate. Waste no time.

Most lock agreements say that the borrower will pay the current rate or the locked-in rate, whichever is higher, if the loan doesn't close before the deadline.

"Really, there's no way out, but that doesn't mean some lenders won't negotiate with you," Bernabe says. If you responded to all requests quickly, and you saw the blown rate lock coming and tried to head it off, "you might find that the lender is willing to negotiate, rather than take a hard line."

The broker or lender might say, truthfully, that the fault was the appraiser's.

"You can state the fact that, 'I didn't hire the appraiser,' " says Anthony Hsieh, president of HomeLoanCenter.com. Put the onus on the lender to hire an appraiser who can get the work done on time.

To negotiate a satisfactory solution to a broken rate lock, "the borrower has to speak with someone in authority," Hsieh says. "Ask for the supervisor's name or e-mail. And you need to communicate with someone in authority immediately. If the person in authority tells you no, at least, as a consumer, you know where you stand."

You might expect that rising rates would make mortgage offices less busy. In the long run, higher rates will have that effect. In the short run, rising rates force borrowers off the fence -- especially homeowners who want to refinance. Many of these people had been floating their rate for weeks or even months, never setting a closing date. Then rates started rising. Suddenly, great numbers of people locked their rates and set closing dates.

At the same time, home buyers became more serious. When rates are falling, a lender might expect 80 percent of purchase loan applications to result in closed loans. When rates are rising, a lender might find that 90 percent of applications result in closed loans.

As more borrowers insisted on getting their loans closed quickly, they created a surge of work for mortgage lenders, appraisers and title companies. Some lenders were caught by surprise.

"I think what happened is a lot of brokers or lenders were not allowing for that extra time," Michaud says, "so they were locking loans for 45 or 60 days and loans were taking 60 to 75 days to close.