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Posted by Anonymous on 8/5/05 9:45pm
Msg #57270

Question for Paul_Fl,Sylvia_Fl,Calinotary or any experienced

Notary here please.

My brother refinanced about a month ago, and he was suppossed to receive after all the
expenses of the refi, like 85000.00 dollars when he got the check in came short 3500.00
because it wasnt included in the hud the prepayment penalty, and he says that if he would
knew that he would pay the prepayment he wouldnt sign the docs.

In other words the hud was prepared without the prepayment penalty, so now he wants to
cancell the loan. I told them that is impossible since everything has funded and he has his money
NOW, what can he do?

He said the guy(L.O,) never mention nothing about a prepayment penalty otherwise he will never
refinance.

Does he needs to get an attorney or he can just sue the L.O. in small claims for that, or the Tittle or the settlement agent has the responsability to disclose all charges in the final HUD.

tHANK YOU!!

PD: He is in CA

Reply by Mike/NJ on 8/5/05 9:58pm
Msg #57275

I would suggest seeking a lawyers opinion on this matter.

Reply by Sylvia_FL on 8/5/05 10:46pm
Msg #57282

That is not a question even the most experienced signing agent can answer.
An attorney's advice is needed.

He should have known there was a prepayment penalty on his previous loan.

Reply by Anonymous on 8/5/05 11:07pm
Msg #57287

Re: Question for Paul_Fl,Sylvia_Fl,Calinotary or any experie

So your brother had a loan with "Lender A" and then refinanced a month ago. The prepayment penalty would not be a fee charged by "Lender B" or title co, it would be charged by "Lender A".

Your brother should look at his copy of the loan papers he signed with "Lender A" before this refi and see if there was a prepayment penalty in that loan. If he refi'd too early, "Lender A" would be charging the penalty in the payoff amount of the loan.

If I read your message wrong, this may not apply, but I think I got it right.....??

Reply by Sheila in San Jose CA on 8/6/05 1:37am
Msg #57306

Re: the new refi, he should have copies of all the papers he signed, have you or he checked them over carefully to see if there is anything regarding the prepay, not just on the settlement statement, but disclosed elsewhere? He still may want to ask a lawyer what to do, in either case.

Reply by Anonymous on 8/6/05 8:12am
Msg #57318

Re: Question for Paul_Fl,Sylvia_Fl,Calinotary or any experie

Most people I have seen in the signing doesnt know what s a prepayment penalty, ARM, 6 month LIBOR, or something like that. But is this just a trick of the LO to not disclose the prepayment penalty, because some borrowers when they see that they have to pay 4 or 5 thousand dollars for PPP they just cancell the signing or they dont sign at all.


So if LO see this trend, so they dont disclose it to the borrower till RTC is expired and now its too late for them.

I feel bad for my brother, I told him to seek the advice of a Real Estate Attorney, the LO should have some type of insurance or the broker for this type of errors.

Reply by Sylvia_FL on 8/6/05 9:04am
Msg #57330

Re: Question for Paul_Fl,Sylvia_Fl,Calinotary or any experie

Your brother should look over his original loan papers he signed.
If there had been a prepayment penalty it would be in there (I always point it out to the borrowers), it would also have been a rider on the mortgage/DOT. He had three days to look over his loan papers so he could have canceled. (This is on the previous loan)
When he went to refinance, if it was within the prepayment penalty period, the new company have to take that out of the proceeds as it would have to be paid to the old lender.
And the amount would have been on the HUD, but it would have been included in the payoff on the first loan, not as a separate fee.

Also, there is usually a document in there that states if payoffs are higher then the borrower is responsible for the difference. For instance if the previous company had not indicated to the current lender that there was a prepayment penalty and had given the payoff without the prepayment penalty, the payoff they were told would have been on the HUD. When it came time to disburse funds then the old lender could have said there was a prepayment penalty they forgot about and so that has to be paid too. The new lender cannot be responsible for paying it out of their pockets. It has to come from the borrower.

Bottom line is your brother should have known about the prepayment penalty, it would have been on the paperwork from the old lender.

Reply by Bobbi in CT on 8/7/05 8:35am
Msg #57451

Prepayment penalty fee..

As Sylvia said, "Bottom line is your brother should have known about the prepayment penalty, it would have been on the paperwork from the old lender."

The LO for the NEW loan and the title company are under NO Obligation to point out to the borrower that their existing lender is charging a prepayment penalty in addition to the original mortgage payoff - even if borrower is refinancing with the SAME lender.

Your brother signed the original Note, mortgage, Truth-in-Lender and other documents that have the prepayment terms printed within them. Sorry, but he should have CALLED his original lender and asked if there was a pre-payment penalty and when it expired BEFORE refinancing. Also, during the recission period he could have called his original lender to verify the payoff figure and what it included.

If the mortgage payoff was higher AFTER the HUD was signed, check the new loan documents to see if he signed an agreement that this was 1) possible and 2) your brother was obligated to pay any shortage. Certainly get advice from a lawyer, bring old and new loan documents, but it may be a hard case to make that it's someone else's fault for not reminding him that he was stilly within the prepayment penalty in his old loan.