Countrywide May Have Overcharged You
When You Sold Your Home
We
are investigating complaints from borrowers that Countrywide improperly charged
what is known as a “soft” prepayment penalty to homeowners who recently sold their
homes. Some home loans allow lenders to charge penalty fees if a mortgage is
paid in full, before it is due, as the result of refinancing. On the other
hand, many of these loans do not allow the lender to charge a penalty if the
mortgage is paid in full because you sold your home. Despite not being allowed to charge the
“soft” prepayment penalty when you sell your home, our investigation shows that
the fee often shows up anyway.
Prepayment
penalties can range well over $10,000; however, many people do not notice
the charge when they sell their home. Closing on a home can be an emotional
and confusing process, and unless you know what to look for, a “soft” prepayment
penalty may not be obvious. Below are
a few examples you can use to determine whether you were the victim of an
improper “soft” prepay. If you think
you may have been overcharged when you sold your home and are interested in
learning your rights, either email
Here
are two examples of where a “soft” pre-payment penalty may show up on your
mortgage:
Example 1 --- The HUD-1
The “HUD 1”, also know as the
“U.S. Department of Housing and Urban Development Form 1” or the “Settlement
Statement” is a form used by the settlement agent (also called the closing
agent) to itemize all charges made against the borrower and seller for a real
estate transaction. It gives a complete list of where the money in the home
purchase is going. Here is an example:
In the HUD-1 above we’ve highlighted the name of the document as well as lines 504 and 505 where the prepayment penalty may show up. As you see, however, lines 504 and 505 do not itemize the charges that make up the amounts. For that information, there will be an attachment breaking down the various charges that add up to the amounts on lines 504 and 505. Here is a sample itemization showing a prepayment penalty:
As you can see, the attachment itemizes line 504 and shows that the lender added a $6,237.00 penalty to the amount required to “Payoff of First Mortgage Loan.” If your loan has a “soft” prepay clause, there should be no prepayment penalty on this line or line 505.
Example 2 --- Estimated Closing
Statement
As part of your closing
documents you should have an “Estimated Closing Statement” such as that shown
below. Most likely there will be a
section titled “Payoffs” as highlighted.
If there is a line item for a prepayment penalty in the “Payoff”
section, then you may have been overcharged by that amount at your closing.
If you are still not sure whether you were charged a prepayment
penalty, feel free to email Chuck
Marshall, or call us at (415) 477-6700.