U.S. Senator Charles Schumer asked Countrywide Financial Corp. to lower interest rates, stop steering homeowners towards risky loans, and to waive prepayment penalties as a means to help homeowners refinance.
Schumer asked the nation’s largest mortgage lender to stop charging “above-market fees” that he felt took advantage of unknowing borrowers.
Additionally, Schumer wants Countrywide to waive prepayment penalties, which restrict homeowners from refinancing or selling their homes in a given time period.
It’s quite common for a loan to have a prepayment period of 3-5 years, which prevents a homeowner from refinancing or selling without being hit with a hefty fee.
The typical prepayment penalty is 80% of six months interest, which often adds up to a significantly large sum.
Though it should be noted that prepays typically allow homeowners to secure lower mortgage rates, and homeowners should be aware of the implications upon signing loan documents.