pre-payment penalties

[bbkenton27]

What is the name of your state? California
I recently bought a 2nd home in Palm Springs area, and I got a loan for the home 80/20. I made sure to buy out any pre-payment penalties, as we were going to flip it. Since then, we decided to keep it and rent out for a year. I went to re-finance, since I got a higher rate with no pre-payment penalties, and guess what? The note shows a 24 month pre-payment penalty, although there was no rider. It is in the 5th paragraph in the note, no bold print, nothing. My broker missed it as well and we are both sick about it! Since the time I got the loan in November until now, it has been sold 2x. Can they legally charge me a pre-payment penalty with-out a rider?
Thanks...B

[seniorjudge]

Originally Posted by bbkenton27

What is the name of your state? California
I recently bought a 2nd home in Palm Springs area, and I got a loan for the home 80/20. I made sure to buy out any pre-payment penalties, as we were going to flip it. Since then, we decided to keep it and rent out for a year. I went to re-finance, since I got a higher rate with no pre-payment penalties, and guess what? The note shows a 24 month pre-payment penalty, although there was no rider. It is in the 5th paragraph in the note, no bold print, nothing. My broker missed it as well and we are both sick about it! Since the time I got the loan in November until now, it has been sold 2x. Can they legally charge me a pre-payment penalty with-out a rider?
Thanks...B

Q: Can they legally charge me a pre-payment penalty with-out a rider?

A: Yes. You agreed to it in writing.

[bbkenton27]

Originally Posted by seniorjudge

Q: Can they legally charge me a pre-payment penalty with-out a rider?

A: Yes. You agreed to it in writing.

I read that by Law they have to attach a rider...there was none!
It was an error on the note only: ie In order to verify whether or not your loan carries a pre-payment penalty, be sure to look for the Pre-Payment Rider when signing your loan documents at closing. If your loan does carry a penalty, it is required by law that this rider be included with your mortgage documentation and that you sign it.

[averad]

Originally Posted by bbkenton27

I read that by Law they have to attach a rider...

Where did you read that?

[bbkenton27]

Originally Posted by averad

Where did you read that?

Broker Outpost @ [url]www.brokeroutpost.com[/url] (under Mortgage Reference Library)