Before the recent economic meltdown, many home buyers who were not able to qualify for standard mortgages were approved for so-called sub-prime mortgages with very high interest rates. Of course, many consumers intended on refinancing at a better rate as soon as they could, and to profit on that expectation, lenders included an “early termination fee.” As a result, consumers who wanted to refinance had to pay a penalty for the privilege of doing so. While this penalty may have been unfair and usurious, it was typically disclosed to consumers.
In the aftermath of the mortgage crisis, most sub-prime mortgages, and their early termination fees, have disappeared. However, at least one huge mortgage lender, Bank of America, may be illegally and surreptitiously adding on early termination fees when its customers sell their homes. At least one consumer discovered that Bank of America had added a $300 early termination fee on the HUD settlement statement the consumer received immediately before closing on the sale of his home. Not only was the fee not authorized or disclosed to the consumer when he refinanced his home, but it was imposed on his home equity line of credit. Of course, a line of credit is typically an interest only loan of infinite duration – by definition, there can be no “early termination” because there is no loan termination or completion date.
We are investigating potential claims against Bank of America for unfairly and deceptively imposing early termination fees on its clients who never agreed to any such fees. If you have recently sold a home that had a Bank of America mortgage or line of credit, we encourage you to review your HUD settlement statement to determine if you have been charged an early termination fee. If you were, please contact us to discuss your legal options.