Here's some info (hypothetical, sort of):
1) Borrower asked loan officer to lock rate and points on 10/11/09 at 4.5% for 2.5% points. Borrower shops around and finds out that's the best rate and decides to accept the GFE and apply for loan with this loan officer. They schedule to meet 10/15/09 for sign loan apps and other docs.
2) On 10/15/09, Borrower meets with loan officer and notices that the points were different from what the loan officer originally quoted. To his advantage, it was 2.0% instead of 2.5%. Borrower pointed it out to the loan officer and he said his computer shows it was locked at 2.0% so borrower proceeded to sign all documents (including lock-in agreement) which showed 4.5% at 2.0 points.
3) On 10/16/09, borrower drops of 0.5% deposit for lock & float agreement which allows the borrower to "float down" to a lower interest/points if the market improves before the loan closes. Loan officer meets with borrower and says there was an error in the loan documents and that the original 2.5 points was the correct one, not 2.0 points. He had a re-printed GFE and lock-in agreement showing 2.5 points and asked the borrower to sign. Borrower did not sign because he felt the original was binding.
4) Borrower and loan officer go back and forth about the points.
5) On 10/19/09, loan officer said that he will honor the 2.0% if borrower agrees to use that change as his "float down" option. Buyer said yes because he wanted the issue resolved and not hold up the 30-day close.
6) Interest rates kept going down. On 10/31/09 (3 days before closing), rate/points were 4.5% at 1.375 points. Borrower contacted loan officer, as advised by friend, and said that he still had his float down option because he legally had 2.0 points and didn't technically have to float down. Because he thought that he was still entitled to his float-down, he asked the loan officer to float down to 1.375 points. Officer refused.
7) Closing docs had to be signed on 11/4 in order to meet Closing Date of 11/9/09 and borrower could not extend Closing Date without breaking the Purchase Contract and 30-day lock commitment. Borrower reluctantly agreed to sign the closing documents with the disputed points of 2.0 points.
1) Are the GFE and lock-in agreement that the borrower signed legally binding and does it entitle the borrower to the 2.0% points?
2) Did the buyer still have a right to exercise his float down option on 10/31/09?
3) If yes to 1 and 2 above, should the borrower ask for a refund from the loan officer for the difference between 2.0 points and 1.375 points? What should the borrower do if the loan officer refuses to refund?