An honest lock price is the price that the lender would quote to the borrower’s identical twin seeking a price quote on the identical loan at the same time.

Dishonest lock prices are very common, since a lender quoting a price on Monday but not locking until Thursday cannot be held to the price quoted Monday. Markets change, and sometimes the borrower’s credentials change, and both such changes provide a screen for over-charges.

If the market price on Thursday is higher, the borrower will be charged the market price or higher, because “the market went against you”. If the market price goes down between Monday and Thursday, on the other hand, the borrower is charged the price quoted Monday, and is probably content, since he received what he was quoted.

Locks are always contingent on a specified loan-to-value ratio, which depends on the appraisal coming in at some minimum value. If the appraisal comes in lower by enough to raise the loan-to-value ratio past a notch point where the price increases, the lender increases the price accordingly and blames it on the appraisal. But if the appraisal comes in higher by enough to reduce the loan-to-value past a notch point where the price should decrease, the original lock price is retained.

Borrowers on the professor’s site are guaranteed honest prices if they follow two simple instructions.

1. They must make sure that the financial information shown in their account has been adjusted for any changes made by the lender. The property value is particularly important, and you should receive a copy of the appraisal.
2. They must click on “Refresh Pricing” in their account immediately after they have been notified that their price has been locked. This will show that the lock price is identical to the price the lender’s system quotes on the identical transaction at that time.
3. If it isn’t identical, email the professor at jguttentag@mtgprofessor.com.

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