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Extended Locks & Float Downs Now Offered

Please be advised that Fairway is now offering EXTENDED LOCKS and RATE FLOAT DOWNS!

The Extended Lock Program is offered under the Fannie Mae, Freddie Mac, and Ginnie Mae direct products for new construction loans only. It allows borrowers to lock an interest rate for periods of 120 or 180 days, with a float down option. 

  • Eligible Products:
    • Conventional Fixed Rate – Fannie Mae and Freddie Mac
    • Government Fixed Rate - Ginnie Mae
  • Eligibility:
    • Available for new construction only

Training: A brief 10 minute training session is required to be completed prior to participation in Fairway’s Extended Rate Lock Program.

Upfront Refundable Fees

A 1.000 point upfront refundable fee is required to be collected from the borrower at time of locking the loan.

  • The upfront fee is refundable at closing or if the loan is denied.
  • The upfront fee is not refundable at closing if:
    • Withdrawn
    • Canceled
    • Changed to a product that is not eligible under the extended lock program

Lock Periods, Rate Adjustments and Pricing

Lock Period

Rate Adjustment

120 Days

0.125%

180

0.25%

Pricing is based on 60-day pricing plus the rate adjustment for the applicable lock period. Rate adjustments are subject to change based on market conditions. Pricing for each extended lock option and period is available in Optimal Blue, and will include all applicable extended lock program rate/price adjustments.

Fairway will disclose the 1% upfront fee on locked Loan Estimate once the loan has been locked.

Float Down Option

Definition: A mortgage rate lock with the option to reduce the locked interest rate if market interest rates fall during the lock period.

The borrower may exercise a one-time float down option within 30-days of closing. The float down rate/price will be calculated based on the current 60-day price plus a 0.125% rate adjustment.

The float down option is applicable for the lesser of 30 days or through the remainder of the lock in period, whichever expires first. Please note that exercising the float down option does not extend the lock period.

Float Down Option Example:

Initial Lock

Float Down

Initial Lock: 180 days

Float Down: Within 30 days from Closing

Lock Date: 5/8/17

Float Down Date: 10/15/17

Lock Exp: 11/4/17

Lock Exp: 11/4/17

60 Day Base Rate: 4.500%

60 Day Base Rate: 4.000%

Extended Lock Adj: 0.25%

Float Down Adj: 0.125%

Final Rate: 4.75%

Final Float Down Rate: 4.125%

Lock Extensions

Lock extensions are permitted up to a maximum of 30 days on either the initial lock or float down option. The borrower is responsible for any applicable lock extension fees. The lock extension request must be made prior to the lock expiration. If the lock extension is requested after the expiration date, then the loan will be subject to a relock at “worst case” pricing.

Note: Extensions are not allowed once the loan has been relocked.

Relocks

Relocks are permitted based on “worst case” pricing.

  • For relocks on the initial lock, the “worst case” pricing will be based on the original price, lock term and product, compared to current market pricing for the same lock term and product. Example: 180-day lock to 180-day lock.
  • For relocks on float downs, the “worst case” pricing will be based on the original float down price, compared to the current market float down price.

The relock term is for a period of 30 days regardless of the original lock period. Any subsequent relocks would be done at “worst case” pricing in the same manner as above.

Product Changes

  • Product changes to an eligible product under the extended lock program will be priced based on the pricing in effect as of the original lock date for that product.
    • The upfront fees will be refunded to the borrower at closing.
  • Product changes to a product that is not eligible under the extended lock program will be priced based on current market
    • The upfront fees will not be refunded to the borrower at closing.
  • Product changes for the purpose of improving pricing are not allowed.

Note: Not available in NY, MA or MO

Please contact your Regional Account Manager with any questions related to this Client Announcement. 

 03/12/19