Chasing Mortgage Prepayment Penalty In MA

[Mort_Gage]

What is the name of your state?What is the name of your state? Massachusetts

I apologize in advance for the long-winded message. I'm trying to include all of the pertinent information.

I have a mortgage with Chase Manhattan Bank USA, N.A. Attached to the NOTE is a Rider that indicates that we will be subject to a prepayment penalty consisting of 6 month’s interest if the mortgage is prepaid during the first 5 years.

This seemed excessive, so I contacted the MA Banking Commission, who indicated that:

• According to MA General Laws, Chapter 183, Section 56, the maximum legal prepayment penalty is 6 month’s interest if the mortgage is prepaid within the first 36 months. We will be reaching the 36-month mark next month.

• Chase is subject to MA laws.

• Because Chase is a national entity, the MA Banking Commission does not have jurisdiction over them.

• The Office of the Comptroller of the Currency (OCC) is the federal agency that has jurisdiction.

I contacted the OCC, who stated that Chase is subject to the laws stipulated in the contract. The MORTGAGE has a section called “Governing Law; Severability”. It states that ”This Security Instrument shall be governed by federal law and the law of the jurisdiction in which the Property is located…” (The property is located in MA.)

So, if I am correct, according to the MA Banking Commission and the OCC, MA law governs the contract.

I contacted Chase before and after speaking with the MA and OCC agencies.

The first time I spoke with Chase, they indicated that NY state law has jurisdiction because that is where they are located. According to the NY Banking Commission, Chase is subject to MA laws. If Chase were subject to NY laws, they would only be able to charge a prepayment penalty of 6 month’s interest within the first year and the prepayment terms had to be disclosed in the Truth in Lending Statement (which they were not.)

The second time I contacted Chase (after speaking with the MA Banking Commission and OCC), the first person I spoke with indicated that they were subject to federal and not state law. (Though she did not know what laws or federal agency applied.) I was then transferred to a supervisor who (after I read the “Governing Law; Severability” section of the Mortgage) indicated that there are some state laws they have to follow, but could not state if this applied. She also indicated that HUD governs them. (I tried contacting HUD, but their regional office is closed because of the Democratic National Convention.) I was then given the number of a dispute fax line that I could use to try to resolve this matter with Chase.

I have not tried the fax line yet because I am still trying to sort this matter out and obtain as much information as possible.

It appears to me that:

• At best Chase does not know what laws apply or at worst is attempting to apply laws a la cart to benefit them.

• The MA and NY Banking Commissions and OCC all agree that MA state laws should apply here, but nobody seems willing or able to put their proverbial ”foot down”.

Does anyone have experience in this matter?

Does anyone know how I should proceed?

Thanks.

 

[amortgageman]

What were the laws three years ago when you signed the note?

 

[Mort_Gage]

Chapter 183, Section 56 of the MA General Laws was on the books at the time of the closing (08/2001).

Here is a link to a letter referencing this law, from the MA Deputy Commissioner of Banks and General Counsel, that was dated 06/21/2001: http://www.mass.gov/dob/01-073.htm.

 

[JETX]

The REAL answer to your question is that banks and bank accounts are regulated by both state and federal statutory law. Bank accounts may be established by national and state chartered banks and savings associations. All are regulated by the law under which they were established.

In your case (Chase Manhattan Bank USA, NA) it is chartered and regulated by Federal laws (12 USC 21, et seq). Unless it is a 'state chartered' bank, the local state laws do not apply.
For links to regulations for national banks, go to:
http://cfr.law.cornell.edu/cfr/cfr.php?title=12
and
http://www4.law.cornell.edu/uscode/12/ch2.html

Your best resolution to this problem will start with your WRITING your bank about your concerns and getting a written response from an authorized officer. With the written response, you can then proceed if warranted.