Remember all of the hullaballoo regarding lenders being sneaky about tacking on those pre payment penalties?  Well, now the borrower will be made aware of this existence at the closing.  A new (another) form will be included in the loan closing documents as a rider to the Promissory Note if there is a pre payment penalty.

 

This is what it is called:

 Prepayment penalty – arm note addendum

 And this is what is says:

 “If within the first twelve (12) months after the execution of this Note, I make a Full Prepayment, I agree to pay apenalty equal to 3% of the original note amount. I will pay this Prepayment Penalty regardless of whether I sell the property or refinance the loan with the same Lender or Note Holder. If I make a Full Prepayment after the twelfth (12th) month from the date of this Note, there will not be any penalty.

BY SIGNING BELOW, I accept and agree to the terms and covenants contained in this Prepayment Penalty -ARM Note Addendum.”

 Sign here:

John Hancock

 Hence, if you did not sign this form, there will should be no pre payment penalty. If you go to pay off your loan and there is a pre-pay, simply ask the lender to send you a copy of the addendum.  No ticky- no washy!

Have a good weekend.  I miss you, Newport!

Dale Siegel