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Mack Investment Group / Illegal prepayment penalty

1 United States Review updated:

I closed escrow on the sale of my house on 3-01-07. GMAC Mortgage automatically applied a $16+ Thousand dollar pre-payment penalty to the pay-off amount on my mortgage. My mortgage DID NOT have a pre-payment penalty. My escrow company, my originating mortgage broker and myself have now spent the last six days trying to get the money that was illegally misappropriated from my proceeds returned to me to no avail. It has now come to my attention that GMAC has engaged in the same practice on more than several other occasions according to my escrow company. This is tantamount to stealing, since GMAC has been aware of the problem for 6 days and has done nothing to rectify the situation. It has also come to my attention that not long ago, GMAC was also involved in a reverse mortgage scam, taking advantage of the elderly. Obviously, GMAC feels comfortable operating outside of the law.

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  • Er
      12th of Mar, 2007
    0 Votes

    This is something that should of course be reported to the department of financial regulation in your state. For anyone else that encounters this, it can be fixed fairly painlessly. Simply use a title company that is also a law firm, the lender can't charge a prepayment penalty without a notarized "prepayment penalty rider". If they can't show the rider form then they can't charge the penalty. Of course this may take a week for them to look at the original papers...

    Also don't assume that they will be responsible for any interest rate issues that arise if you are refinancing, like having to break a lock with the new lender. Meaning, if you get to closing and have this issue arise and the delay makes you lose your locked in rate, assume that you will not be compensated for taking a higher rate if it went up. You still can negotiate with the new lender about not taking a higher rate, etc.

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