Prepayment Rider Discrepancy

[CVinje]

State = Arizona

Upon signing for my first home I knew there was a prepayment penalty as it was discussed and disclosed prior to my signing so that was no issue; however, two years and a couple months later (now) I am trying to refinance my home only find out that my current primary lender shows a prepayment penalty with the payoff statement my broker obtained. Concerned, I looked through my paperwork (the copy of the documents I received upon signing for my original loan) and found the prepayment rider that lists the penalty period as being two years - however my primary lender (whom gained servicing my loan after it being transferred many times = not the original) shows a 3 year prepayment penalty. After speaking with my lender they told me I had to talk to the company whom I originally signed with because they'll have the original documents which is where they obtained the info. I'm waiting to hear from them right now regarding what they have my signature on - a 2 year or 3 year prepayment rider - and I'll go from there. The question(s) are:

a) If the original documents (prepayment rider) show a 3 year prepayment penalty and the only copies I have show a 2 year prepayment penalty, is there anything I can do? I think the problem for me is that my copies do not have signatures on them - they were copies before signing.​

b) If the original documents (prepayment rider) show a 2 year prepayment penalty (matching the copy I have) who do I have to start the corrective action with to get my refinancing done ASAP, the original company I signed with or my current loan servicing establishment?​

Thanks for your time,

Chad Vinje

 

[BriantheBanker]

First things first... The Broker you are working with could take a pro-active step in assisting you with your proofs.

Q.a) If the original documents (prepayment rider) show a 3 year prepayment penalty and the only copies I have show a 2 year prepayment penalty, is there anything I can do? I think the problem for me is that my copies do not have signatures on them -they were copies before signing.
A. Chances are, your copies are accurate. The closing/escrow agent normally makes those copies. They would (not likely) have conflicting ppp riders.


Q.b) If the original documents (prepayment rider) show a 2 year prepayment penalty (matching the copy I have) who do I have to start the corrective action with to get my refinancing done ASAP, the original company I signed with or my current loan servicing establishment?
The loan servicer is the only agency that can help.
Once again, because of the enormous amount of paperwork involved- it could take time for your servicer to gain and review your loan terms.

Did you get a 2/28 or 3/27?? (fixed for 2 or 3 years.)

Depending if the Bank is FEderally or state chartered, your state may dictact the ppp. (for instance, 2/28 can only have 2 yr ppp.)
if bank is fed, they don't necessarily follow state guidelines.
Try to send your Rider copy to servicer.
You can claim, "how would i get a 2 year rider if it were a 3 year?"

this make take some time, i hope you can wait.

Good luck,

BriantheBanker

 

[CVinje]

Thank you for the answers - regarding your questions.........

Q)Did you get a 2/28 or 3/27?? (fixed for 2 or 3 years.)

- The loan type was a Conv. 30 yr. fixed rate loan, I don't know what 2/28 or 3/27 would refer to unless you mean an ARM.​

Also, I'm not sure what you mean when saying:

You can claim, "how would i get a 2 year rider if it were a 3 year?"

Thanks again for the help.

Chad

 

[BriantheBanker]

N/a

2/28 & 3/27 are ARM programs. you have a fixed, so it doesn't apply. Many companies follow the fixed period for their pre-pay terms.

2 year fixed with 2 year prepay.

Sorry to confuse you.

BriantheBanker

 

[CVinje]

No problem, here's another question. This information came to light only when my loan broker requested the payoff information, which listed the prepayment penalty. As I said before I looked up the info and found the discrepancy. The problem I have now is my rate lock expires Thursday the 26 of this month and I'm worried about losing a good rate. My rate now isn't anything too special (I don't think) it's a 5.875% 5/1 ARM with horrendously poor rate caps and fluctuation allowance after the 5 years (basically just something I'll have to refinance again in 5 years). I'm getting enough cash back that I would cover the prepayment penalty so I'm not going to realize an actual hit to my pocketbook, but I'll lose the money I'd be getting back (a good chunk anyway). Should I go ahead with the new loan, let the prepayment penalty get paid by my cash back and try to get my money back afterwards if the paperwork is in my favor; or should I let my rate lock expire and chance them bumping it up some and continuing to make my current monthly payment (costing about $250 more than the monthly I would have with the ARM) and hope I get the paperwork in my favor?

Chad

 

[BriantheBanker]

too high of a rate

chad,
Your loan officer is looking to make (gross) ~2% on the rate.
5.875 is Too high!
You can do MUCH better.

Unless you need the cash tomorrow, look around for a bit better rate.

5.5% would still make the LO money.

Good luck,

BriantheBanker

 

[CVinje]

Update

OK, I haven't received my copy via mail yet but my lender claims they have my signature on a Prepayment Rider listing the time period as 3 years; however, as I stated previously my only copies and my notes from discussions with my original LO is only a 2 year prepayment penalty. I worry something was done to sucker me for this extra year - either an after the fact modification of the document or a document swap at the signing that I did not catch. I fear I have no case if, in fact, the copy with my signature (the original) bears the 3 year prepayment clause. Is there anything I can do (do I have a case)?

Thanks again,

Chad

 

[kidd12]

kidd12

undefined I would run to the county register of deeds or county clerk's office. Your mortgage or DOT would be recorded, normally an adjustable rate rider and prepayment penalty rider would be attached. You needed to sign these, so you could get a copy of the prepayment penalty from there and note any descrepancy on your unsigned copy from closing and the one the lender recorded.