How should we complete the “Rate Lock” section of the Loan Estimate (LE) for our in-house loans? Our files do not include separate rate lock agreements, and our loan committee approves the rates for our in-house loans. Our auditors noted that our LEs for these loans do not show the rate as locked and recommended that we either check the rate lock box “yes” at the time the LE is issued if we will not be changing the interest rate or check the box “no” until a decision has been made and then provide a new LE with the box checked “yes” once the rate is confirmed. However, we don’t believe a rate approved by our loan committee meets the regulatory definition of a “rate lock.” Are we correct in marking the box “no” in such cases?

Oct 14, 2021

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Yes, we believe you are correct in marking the rate lock box “no” in all cases where you have not entered into a written rate lock agreement with the customer.

Under Regulation Z, marking the rate lock box “yes” on the LE is appropriate only when the customer has signed a written rate lock agreement. Further, the preamble of the TRID final rule states that even when a creditor has a policy of honoring a quoted rate, the rate lock box should be marked “no” if the creditor and consumer have not entered into a rate lock agreement.

For resources related to our guidance, please see:

Regulation Z, 12 CFR 1026.37(a)(13) (“For each transaction subject to § 1026.19(e) the creditor shall disclose the information in this section: . . . A statement of whether the interest rate disclosed pursuant to paragraph (b)(2) of this section is locked for a specific period of time, labeled ‘Rate Lock.’”)

Regulation Z, Official Interpretations, Paragraph 37(a)(13), Comment 1 (“For purposes of § 1026.37(a)(13), the interest rate is locked for a specific period of time if the creditor has agreed to extend credit to the consumer at a given rate, subject to contingencies that are described in any rate lock agreement between the creditor and consumer.”)

Final Rule, Integrated Mortgage Disclosures, 78 Fed. Reg. 79730, 79919 (December 31, 2013) (“Regarding the situation where the creditor has a policy to honor the rate quoted without a rate lock agreement, both proposed § 1026.37(a)(13) and comment 37(a)(13)-1 expressly contemplate a rate that is locked for a specific period of time pursuant to a rate lock agreement. Accordingly, where a creditor has a policy to honor the quoted rate, but does not lock the rate pursuant to a written agreement with the consumer, the creditor would disclose ‘no’ pursuant to § 1026.37(a)(13)(i). The Bureau believes this disclosure is appropriate to aid the consumer’s understanding of the transaction, because the creditor would not be bound by an agreement to provide the interest rate to the consumer at consummation.”)