refinance cancellation fees

[web-chick]

What is the name of your state?I recently applied for a mortgage refinance online. I initialed some forms, including one that said that if I backed out, I would be responsible for paying a 5% cancellation fee, and my rate was locked in. After that, I received a message from another mortgage co. offering a lower rate. I explained that I already locked in a rate with another company and would have to pay a cancellation fee if I backed out. I was told by the second co. that this is illegal and is merely a scare tactic. I would like to get out of the first agreement, but don't want to pay upwards of $9000 in penalties. Is this illegal and what are my options?

 

[web-chick]

I'm in Maryland

 

[MortgageGuru]

I can't see how that would be anywhere near legal. Who was it with?

 

[web-chick]

It's throught Aaxa Discount Mortgage, which I found on Bankrate.com. I've been told that it's illegal to charge any fees until a mortgage is closed on except for appraisal fees and fees related to pulling a credit report.