Predatory terms???

[dominator63]

FLORIDA


Last June I purchased a 29 unit apartment property in Florida for $2,575,00. The title is in the name of my company and the loan was personally guaranteed by my father and me. I received the term sheet from the lender the day before the closing. It was for a loan amount ($1,250,000) far below what I was expecting. The lender was aware that I was in a very desperate situation as I had already received an extension for closing and had over $500,000 in escrow which the seller said she would take if the deal did not close. I then flew with my mortgage broker to Tampa to speak with the lender face to face and to try and ask for an increase in the loan amount. The lender did increase the amount by $50,000 however changed the terms of the prepayment penalty. The original "prepayment premium period" was for three years and it was changed to ten years. The lender stated that this was the only way that they would increase the loan by $50,000. As I needed to close or lose over half of a million dollars, I had to accept these terms. I have heard from people that these terms that I have are predatory and I would like to know if this is true. I have exactly copied the prepayment section from the note.

10. Voluntary and Involuntary Prepayments.
(f) Any prepayment premium payable under this Section 10 shall be computed as follows:
(i) If the prepayment is made between the date of this Note and the date that is ten years after the date of this Note (the "Prepayment Premium Period"), the prepayment premium shall be equal to the sum of:
A. The amount of interest that would have been earned by Lender under this Note on the principal amount being prepaid during the balance of the Prepayment Premium Period had the prepayment not occurred: plus
B. three percent (3%) of the principal amount being prepaid.
(ii) If the prepayment penalty is made after the expiration of the Prepayment Premium Period, there shall be no prepayment premium due.

I would greatly appreciate any insight or information regarding my situation.

Much Thanks

[lcannister]

As I needed to close or lose over half of a million dollars, I had to accept these terms. I have heard from people that these terms that I have are predatory and I would like to know if this is true. I have exactly copied the prepayment section from the note.

Why do I suspect you did not even have an Atty view these documents before you "had" to sign them? And you were spending close to 3 million dollars.

If your contract was contingent upon getting financing and worded appropriately the seller didn't stand a prayer of keeping your 1/2 million dollars.

You need to call the appropriate office in your state and ask what the states prepayment rules and regs are for your state they vary greatly from state to state.

[ADBunting]

I find it hard to believe that there wasn't a contingency in your contract involving over a half million dollars?

Also It's hard to believe that you have what amounts to a half million non-refundable deposit. It sort of sounds like the appraisal was way below the asking price that you agreed to. So how can the seller legally 'take' your "over 500k"?

Not being an attorney of any type (although I should probably be one given all of the research I've done over the years) you really need to consult a legal expert that can go through your paperwork and situation that knows the local statutes.

I'm having a Hell of a time here and it's only for $26k. (But that 26k is all that we own)

April

[HomeGuru]

Originally Posted by dominator63

FLORIDA


Last June I purchased a 29 unit apartment property in Florida for $2,575,00. The title is in the name of my company and the loan was personally guaranteed by my father and me. I received the term sheet from the lender the day before the closing. It was for a loan amount ($1,250,000) far below what I was expecting. The lender was aware that I was in a very desperate situation as I had already received an extension for closing and had over $500,000 in escrow which the seller said she would take if the deal did not close. I then flew with my mortgage broker to Tampa to speak with the lender face to face and to try and ask for an increase in the loan amount. The lender did increase the amount by $50,000 however changed the terms of the prepayment penalty. The original "prepayment premium period" was for three years and it was changed to ten years. The lender stated that this was the only way that they would increase the loan by $50,000. As I needed to close or lose over half of a million dollars, I had to accept these terms. I have heard from people that these terms that I have are predatory and I would like to know if this is true. I have exactly copied the prepayment section from the note.

10. Voluntary and Involuntary Prepayments.
(f) Any prepayment premium payable under this Section 10 shall be computed as follows:
(i) If the prepayment is made between the date of this Note and the date that is ten years after the date of this Note (the "Prepayment Premium Period"), the prepayment premium shall be equal to the sum of:
A. The amount of interest that would have been earned by Lender under this Note on the principal amount being prepaid during the balance of the Prepayment Premium Period had the prepayment not occurred: plus
B. three percent (3%) of the principal amount being prepaid.
(ii) If the prepayment penalty is made after the expiration of the Prepayment Premium Period, there shall be no prepayment premium due.

I would greatly appreciate any insight or information regarding my situation.

Much Thanks

**A: here's some insight. Hire the attorney that you have hired before signing anything.

[HUD-1]

Most abusive lending laws are aimed at protecting naive homebuyers (principal residences), not savvy multifamily investors. (Florida Fair Lending Act Chapter 2002-27).