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Borrowers win clarified penalty terms

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Mortgage Broker News | 05 Mar 2012, 08:00 AM Agree 0
After class-action suits and a lake of client tears, the federal government moved Sunday to force banks to clarify their prepayment and penalty terms.
  • John Wright | 06 Mar 2012, 06:18 AM Agree 0
    This falls short of the mark in my opinion. Lenders are free to use any formula they like to calculate the penalty as long as they disclose it. I think it makes more sense to have a standardized formula. Years ago the lenders would use the 5 yr rate to calculate the penalty when paying out a 5 yr deal and they changed it to the closest term to discourage payouts. In many cases this tripled the penalty. Why didn't they address this? This is the real issue not disclosure.
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