One of my best friends sold her house yesterday. About 18 hours before the closing, my friend got the final numbers from the realtor and bank, with closing costs, mortgage payoff info, etc. She had taken out the loan 2 years ago for $118,000. She’s made all her payments since then, and each month the balance on the loan went down. Imagine her surprise when she got the final loan amount and it was $119,000. She called the bank and was told that they had a prepayment penalty if you sold your house to a relative. Ok. That’s a bit strange, but since she wasn’t selling her house to a relative, why was the penalty being added on? Well, it turns out that the bank assumesyou’re selling to a relative – since I’m sure that’s such a common thing? – and you have to prove otherwise in order to not have the penalty assessed. Wow. So my friend (who is known for her ability to raise hell) told them that closing was in 18 hours, that they had dragged their feet about getting the paperwork done in the first place, and that they had better get everything fixed in time for closing. She’s pretty scary when she’s pissed, and I guess it worked, because they got the new paperwork printed up in time for the closing yesterday morning.
She and I were talking about the whole fiasco afterwards, and it seemed like such a scam. Since the bank didn’t get the paperwork ready until the very last minute, maybe they think that people won’t have the time to look over everything before they sign the papers? In my friend’s case, the penalty had actually increased the amount of the loan from it’s original value, but what about someone who’s had their house for several years and hasn’t been paying attention to the amounts listed on their statements? Maybe they would just sign off on the loan repayment paperwork and not notice the $3000 charge. What a silly prepayment penalty too – for selling the house to a relative? How did they dream that one up? I guess this just serves as one more reminder to pay attention to our bank balances and outstanding loan amounts, and to read things before we sign them.