Prepayment Penalties... What A Joke!

In the crazy market that is today's reality, each new day can bring a new challenge. This has come in the form of product changes, product elimination, rate changes, companies going under, and the list goes on and on! There has been considerable debate, change, and legislation put in place during the past 2 years. It has been a roller coaster to say the least! At the same time that there is enormous pressure on lenders to work with buyers on loan modifications and refinances to fight of foreclosure, there are still millions of people out there stuck in a loan with a hefty prepayment penalty. I am working with a customer right now that is stuck in a subprime loan. He is sitting at 12.65% and I am trying to refinance him into a conforming loan. His lender is charging him a $3600 prepayment penalty to payoff his loan of $72,000! I have tried working with the lender on his behalf to get it waived, but no luck. All of these lenders know good and well what is going on in the economy and you would think they would be willing to do their part. After all, it seems they will just seek a bailout if times get tough! The frustrating part is that this lender is one of the major players and they are also one who received assistance from the FED not too long ago! When they need help, someone was there for them. When a lonely customer needs a measly $3600 waived by a BILLION dollar company to better his financial situation, NO help is given! This sure seems out of whack. What do you think? One other tidbit of information on this borrower that doesn't help his case is this. They are current on their Mortgage and have never been late. This seems like a positive and not a negative, but it isn't.
I wonder if any help would be given to them if they were at risk of foreclosure? We will never know, but it is sad that they will not help someone out who could really use it. They may been in good shape and current now, but bad occurrence that puts them out of work etc and their situation could spiral out of control in a hurry at that astronomical interest rate! The good news is that I still think we will be able to get this loan done for them. It is just going to be much harder with this penalty! Keep your fingers crossed for them and lets all hope some new legislation goes into effect that puts an end to these horrible penalties!

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