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Prepayment

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BUSINESS
December 19, 2004
I sold my home and will settle Dec. 22. My $63,000 mortgage loan has a prepayment penalty. It states that I must pay six months interest on the amount prepaid in excess of 20 percent of the original loan amount. How much money can I estimate to pay for penalty? Some residential mortgage loans include a penalty for prepayment during the first three years. These loans usually carry interest rates that are higher than average. The prepayment penalty guarantees the lender a profitable return on the loan even if it is paid off within a short time.
ARTICLES BY DATE
BUSINESS
Jamie Smith Hopkins | March 16, 2012
If you owe $100,000 more on your mortgage than your home is worth, do you have any idea when you might reach the break-even point? HSH.com , a mortgage-information company, has a new calculator designed to help answer the question -- variations of which are bedeviling millions of borrowers across the country. (In the Baltimore area alone, 125,000 homes are "underwater," real estate data firm CoreLogic estimates.) HSH's "KnowEquity When" calculator , launched this week, spits out an at-the-waterline date after you enter in your mortgage terms (how much, when, what interest rate)
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BUSINESS
By Kenneth R. Harney | January 7, 1996
WASHINGTON -- Homebuyers and refinancers nationwide are likely to get a new carrot dangled in front of them when they apply for a fixed-rate mortgage this year: Discount rates and fees, if borrowers agree not to pay off their loan within the first several years -- and are willing to pay a cash penalty if they do.The deal your lender offers may sound something like this. Instead of you paying our standard 30-year fixed rate of 7 1/2 percent, we'll knock a quarter of a percentage point off that quote, or we'll pay $1,500 of your closing costs, if you lock yourself in with our no-prepayment pledge.
BUSINESS
By Liz F. Kay, The Baltimore Sun | June 30, 2010
Three Maryland mortgage companies must refund about $246,000 in prepayment penalties charged to customers statewide in violation of a 2008 law, according to state financial regulators. Litton Loan Servicing and Saxon Mortgage Services have returned $71,000 collected from 160 Maryland consumers, and Bayview Loan Servicing refunded $104,000 to 40 Marylanders, according to the state Department of Labor, Licensing and Regulation. The violations were discovered during compliance examinations conducted by the Office of the Commissioner of Financial Regulation.
BUSINESS
By ELLEN JAMES | December 9, 1990
A new breed of promoters would like to charge you $500 to $1,000 to accelerate your mortgage payments -- thereby saving you a bundle in interest charges. Sounds like a fine idea except for one thing. You can easily do the same thing on your own for nothing.Although the secret has been slow to get out, there is no reason in the world why a mortgage borrower can't make extra payments to principal, thereby dramatically cutting the term of his loan and sparing himself large amounts of interest.
BUSINESS
By James M. Woodard and James M. Woodard,Copley News Service | October 11, 1992
How can a mortgage loan with a "no prepayment penalty" clause result in a hefty prepayment penalty for the borrower?That question was recently asked by a young couple who were refinancing their home mortgage loan. They were asked by the original lender to pay a prepayment penalty of $3,765, even though their mortgage note (contract) clearly stated no such charge would be made."It's a problem that's surfacing in an increasing number of refinance cases," according to a mortgage loan officer of a major bank, who would speak only on the condition of anonymity.
BUSINESS
By BLOOMBERG NEWS | October 26, 2004
ATLANTA - Delta Air Lines Inc., struggling to avoid a bankruptcy filing, said yesterday that American Express Co. has agreed to provide as much as $600 million in financing, including $500 million to prepay for the airline's frequent-flier points. American Express, which extended its credit card partnership with Delta, also will provide a loan of as much as $100 million in a credit agreement the airline is seeking from lenders, Delta said in a statement. Shares of Delta, the third-largest U.S. airline, rose as much as 24 percent on the news before falling back.
BUSINESS
By Jacqueline Seaberg and Jacqueline Seaberg,Baltimoresun.com Staff | May 10, 2004
Avi Amoyal allowed customers to pump gasoline at his Baltimore service station for 10 years. But that changed two years ago. "When the gas prices went up, and everyone was freaking out, we had one or two drive-offs," said Amoyal, who has owned the Falls Road Sunoco at 4533 Falls Road for 12 years. "Those were in one week; we had another one the next week. We had to make a decision." Now, the Falls Road Sunoco requires customers to pay before filling their tanks. "No gas unless you prepay," Amoyal said.
BUSINESS
Jamie Smith Hopkins | March 16, 2012
If you owe $100,000 more on your mortgage than your home is worth, do you have any idea when you might reach the break-even point? HSH.com , a mortgage-information company, has a new calculator designed to help answer the question -- variations of which are bedeviling millions of borrowers across the country. (In the Baltimore area alone, 125,000 homes are "underwater," real estate data firm CoreLogic estimates.) HSH's "KnowEquity When" calculator , launched this week, spits out an at-the-waterline date after you enter in your mortgage terms (how much, when, what interest rate)
BUSINESS
By Laura Smitherman and Laura Smitherman,SUN STAFF | April 19, 2005
A Maryland predatory-lending law that limits how much banks can charge borrowers for paying off a mortgage early can't be applied to national banks that operate in the state under a ruling issued last week from a federal judge in Baltimore. The ruling came in response to a lawsuit brought by National City Corp., a Cleveland bank that does mortgage lending in Maryland through two subsidiaries, National City Mortgage and First Franklin Financial. The bank has collected about $4 million in prepayment penalties in Maryland over several years.
BUSINESS
By KEN HARNEY | March 23, 2008
Almost anyone who's bought a house or taken out a mortgage in recent years knows the problems: Lenders' "good-faith estimates" of loan and settlement fees provided at application too often are off the mark. Eleventh-hour surprise charges can add hundreds or even thousands of dollars to consumers' bottom-line costs at closing. No federal regulation requires strict adherence to the estimates. The whole process of obtaining a mortgage lacks transparency, and loan features often are confusing to consumers or never are explained by lenders and brokers.
NEWS
By Laura Smitherman and Laura Smitherman,Sun reporter | February 2, 2008
A key state lawmaker is working with the banking industry's trade group on legislation that would reverse a Maryland Court of Appeals decision prohibiting certain penalties for borrowers who pay off home equity loans early. The case involved a popular loan program at Provident Bank that enabled borrowers to tap into equity in their homes without paying closing costs as long as they kept the loan for at least two to three years. Maryland's highest court ruled late last year that recouping the closing costs if a consumer refinances or pays off the loan before then amounts to a "prepayment penalty" that's not allowed under state law. Banking industry officials say that without a guarantee that borrowers will pay interest on home equity loans for at least a few years, they can't afford to offer no-closing-cost products, making borrowing more expensive for consumers.
BUSINESS
By Carolyn Bigda and Carolyn Bigda,Tribune Media Services | September 16, 2007
Much attention is being paid to homeowners who can't afford their mortgage payment. But what if your bill is manageable? Or your interest rate hasn't moved upward yet? Should you prepay some of your mortgage? The national median sale price for existing homes, about $230,000, is on the decline for the first time since 1968, according to the National Association of Realtors. So adding a few extra dollars to the mortgage payment might seem like the safest way to build equity: Any money you pay above the amount due is applied to the principal, not interest.
BUSINESS
By Ken Harney and Ken Harney,earthlink | July 6, 2007
It won't mean the end to no-income verification or high-risk mortgages for subprime homebuyers, but new guidance from federal financial regulators will almost certainly cut their availability sharply. In a long-awaited policy statement on loans to borrowers with imperfect credit histories, federal financial regulators a week agourged banks, credit unions and their mortgage subsidiaries to verify income, assets and employment on all loans except in special cases where borrowers could demonstrate substantial financial reserves.
NEWS
By Matthew Dolan and Matthew Dolan,Sun reporter | January 27, 2007
The Parkville couple didn't want to burden their children. A retired sheet metal worker and his stay-at-home wife, Thomas and Dolores Amig, walked into Stella Funeral Home in Baltimore last year and agreed to shell out more than $7,000 to cover Dolores' future funeral. Owner Paul Stella demanded full payment and, to the Amigs' surprise, came to their home the next day to pick up the trust fund check. With the news this week that the state suspended Stella's operating license and the FBI raided his offices as part of a fraud investigation, the couple in their 70s don't know whether their money has been stolen.
NEWS
By Matthew Dolan and Matthew Dolan,Sun reporter | January 23, 2007
In a state where the cost of a funeral often exceeds the national average, customers who prepaid for services at Stella Funeral Home tried to buy a little financial security. That confidence might have been shattered this week after federal agents raided the home and business of Baltimore funeral director Paul Stella, whose state license was yanked quietly late last fall. In court papers unveiled yesterday, the FBI detailed an eight-month investigation that the agency says found evidence Stella and his employees secretly drained more than $550,000 from 140 client trust accounts set aside for future funerals.
BUSINESS
By Michael Gisriel | May 22, 1994
Q: I recently heard something about a new law that would allow homebuyers to pay their real estate taxes semiannually. Where and when does this law take effect, and how will this law help homebuyers?D. Huntermark, BaltimoreA: The General Assembly passed a law in 1993 that let all Maryland counties and Baltimore allow homebuyers to pay real estate taxes six months in advance, instead of the current 12 or 14 months in advance -- the practice in Maryland since 1967.This requires homebuyers to come up with less cash at settlement -- six to eight months' worth instead of l2 to 14 months' worth.
BUSINESS
By Ken Harney and Ken Harney,earthlink | July 6, 2007
It won't mean the end to no-income verification or high-risk mortgages for subprime homebuyers, but new guidance from federal financial regulators will almost certainly cut their availability sharply. In a long-awaited policy statement on loans to borrowers with imperfect credit histories, federal financial regulators a week agourged banks, credit unions and their mortgage subsidiaries to verify income, assets and employment on all loans except in special cases where borrowers could demonstrate substantial financial reserves.
BUSINESS
By Gregory Karp and Gregory Karp,The Morning Call | September 24, 2006
The old question about whether you should spend extra money on paying off the mortgage early has a new twist. In a recent research report, economists for the first time posed a specific and common question: "If I have extra money for savings, should it go toward retirement or paying down my mortgage?" Though the report is riddled with dense jargon and algebraic formulas, the conclusion is crystal clear. "About 38 percent of U.S. households that are accelerating their mortgage payments instead of saving in tax-deferred accounts are making the wrong choice," says the report by economists Gene Amromin of the Federal Reserve Bank of Chicago, Jennifer Huang of the University of Texas at Austin and Clemens Sialm of the University of Michigan.
BUSINESS
By KENNETH HARNEY | February 18, 2006
Should homebuyers with solid credit histories subsidize mortgage borrowers who pay their bills late? Should loan applicants be separated into categories according to their likelihood of default, with the lowest-risk borrowers charged the lowest rates and fees? For decades the mortgage industry followed the plain vanilla, one-price-fits-all approach. If you qualified for a 30-year loan, the rate was the same for you as for the next applicant, regardless of your credit history. In effect, interest rates were cross-subsidized.
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