escrow agent goofed

[kellys]

What is the name of your state? California

My husband and I recently sold our condo in CA. We closed escrow about 4 weeks after we were supposed to because the buyers were having some trouble with the lender. We never received an initial settlement figure from the escrow company and never signed anything agreeing to the close of escrow 4 weeks later. Don't get me wrong, we wanted to close escrow but we never signed any new documents with the new date. Well, we finally closed escrow on June 7, 2006. On June 8, the escrow officer called us and said that she forgot to tell us about a prepayment penalty on our mortgage of $6,320 and a $3,000 credit to the buyer so we now owe them $9,100. At this point, we had still not received a final settlement statement. We told her we had a problem with this since we were not aware of any prepayment penalty nor do we have any evidence of one in our loan documents. She then threatend legal action if we did not pay up.
A few days later, she called and said she would waive the $800 in escrow fees for their mistake and she offered two payment plans. We could make monthly payments for seven months for a total of $7,700 or make one lump sum payment of only $5,500. Why would they be willing to take such a discount?
We are refusing payment since we did not agree for her to pay this fee. Had we known about the prepayment penalty, we would not have sold the condo and we would have cancelled escrow. The buyers were willing to rent it from us. We cannot afford this penalty. We have since received a letter from their legal department demanding payment. We have hired a lawyer but I am curious about our odds of success in this matter.
P.S. The buyer's realtor is affiliated with the owner of this escrow company. The escrow company is a DBA of the realty company. They did not disclose this to us.

 

[nextwife]

Well, we finally closed escrow on June 7, 2006. On June 8, the escrow officer called us and said that she forgot to tell us about a prepayment penalty on our mortgage of $6,320 and a $3,000 credit to the buyer so we now owe them $9,100. At this point, we had still not received a final settlement statement. We told her we had a problem with this since we were not aware of any prepayment penalty nor do we have any evidence of one in our loan documents. ...

Had we known about the prepayment penalty, we would not have sold the condo and we would have cancelled escrow. The buyers were willing to rent it from us. We cannot afford this penalty.

I'm kinda confused why the closing agent is in any way responsible for the cost or your lack of awareness of it's existance? Informing or not informing you of the prepayment penalty that your current mortgage lender is entitled to charge, because that is the mortgage you chose to get, NOT the rersponsibilty of the closing agent, other than showing you the mortgage payoff for accuracy.

It is NOTtheir responsibility to ask if it's ok to close when there ALREADY a prepay penalty. The loan you currently have is the problem - and that was YOUR responsibilty to check out before you obtained that mortgage! If you wished to make your sales contract contingent upon closing without a prepayment paenalty, you should have included such language in your accepted offer.

The closing cost credit was agreed in the offer? If so, you were already made aware when you agreed to it.

 

[pojo2]

The first part of your post is totally irrevalent as you DID finally close the escrow regardless of signing an extension or anything else. So the question is WAS there a prepayment penalty associated with your loan? Simple question, simple answer either YES or NO or we did not pay attention to what we signed and by gosh there is a prepayment penalty.

When you called your Mortgage company for an estimated pay off close to the selling date what figure were you quoted did they mention a prepayment penalty at that time? Didn't call?

If you read closely the paperwork you signed this time I am betting there is a place where they clearly state that errors may be corrected!

 

[kellys]

no prepayment penalty

We contacted the mortgage holder and they have been unable to show us proof of any type of prepayment penalty that we agreed to in the loan agreement. I have researched on the internet and they are currently involved in a lawsuit for illegally charging prepayment penalties that were not disclosed in the loan documents. I have also asked the escrow officer to provide me with a copy of the payoff letter with the prepayment penalty on it and she has not provided me a copy of that either.
I have already filed a complaint with the Department of Corporations and they feel the same way that I do.
Also, I have found 4 instances in our escrow instructions where it states that the escrow officer cannot close escrow before obtaining signatures from all parties involved agreeing to any and all fees. This escrow officer received the payoff letter with this penalty information weeks before the close of escrow. She admitted to both myself and my husband that she did not even look at the letter until after the close of escrow because it came in the mail on a day that she was not in the office and "it just sat on her desk." Our escrow instructions also state that we shall not be responsible for any mistakes that are caused by willful misconduct or gross incompetence.
Can an actual lawyer respond to this post?