Prepayment penalties in Ohio

[mattandallismom]

We are refinancing in July. While reviewing our mortgage I noticed a rider that stated we would be penalized 3% the first and and 2% the second if we pay the loan off. We kicked around the possibility of selling but put that on the backburner for now because of the penality. I called our mortgage company to find out if we paid our note off early and financed a new more expensive loan with them that they would waive the fee. Oh no way possible we were bought by Merril Lynch therefore they do not EVER allow us to waive. Well my husband spoke with a lender today and said in Ohio you legally can't charge over 1% prepayment penality. I looked it up and the ORC does have a section [§ 1343.01.1] § 1343.011. Residential mortgages; discount points; prepayment and refinancing penalties.

C) (1) Except as provided in division ©(2) of this section, residential mortgage obligations may be prepaid or refinanced without penalty at any time after five years from the execution date of the mortgage. Prior to such time a prepayment or refinancing penalty may be provided not in excess of one per cent of the original principal amount of the residential mortgage.

Do you think there is a way to enforce this with them? If so does anyone know how? They p*ssed me off so bad I just want to get rid them now.

Thanks in advance!!!

[SecretAgentWoman]

On my checklist when home loan shopping:

Make sure there is NO prepayment penalty!

[mattandallismom]

On my checklist when home loan shopping:

Make sure there is NO prepayment penalty!

I wish we would have been more informed! Make sure they don't throw it in at the closing like they did to us.

[amortgageman]

When I was licensed in Ohio, (two years ago), I do not recall such a statute. You will need to check and see when the statute became effective. Many states are moving towards such laws, and I remember Illinois did so about three years ago.

What I noticed at that time was an increase in interest rates charged on loans in Illinois were about 1/2% higher than interest rates charged in Indiana.

Should you have that prepayment penalty on your loan, and the new law was in effect at the time of closing, then it will be real simple to get out of the prepayment, after you call the proper authorities in Ohio (and let me tell you them boys are good!!!!).

[firstsource]

I think you are out of luck here:

"On May 24, 2006, the Ohio General Assembly passed new legislation to address various newspaper reports of alleged “predatory” lending practices throughout the state of Ohio. This latest legislative effort comes four years after the Ohio General Assembly enacted the Mortgage Brokers Licensure Act (Senate Bill 76) and Predatory Lending legislation (House Bill 386).

The primary focus of the legislation was to give the Ohio Attorney General direct enforcement authority over certain lending activities. The new law will be effective January 1, 2007".

Summary of Senate Bill 185

The Ohio Home Ownership Protection Act

Bricker & Eckler LLP

June 2006

[mattandallismom]

Thanks so much for your replies. The ORC code I pulled was effective in 1975 I believe. I spoke with a lender at the bank I for and she said there are always so many loopholes in the laws it's easy to get around them. I'm just so annoyed with consumer protection in Ohio. We already ame to the conclusion that we would stay here 2 more years BUT they were such a-holes it's the whole point of the issue. on them, I'm being financed by the bank that sold them!!! I'll be sure to send them a thank you letter after we close!