Are Pre Payment Penalties no longer legal in CA?

[ladera1_IHB]

Interesting thing I found out today...



I called my lender to see what my PrePayPenalty was on my loan and they told me that "under current state law, we cannot charge you the PPP because you have an adjustable loan." I have a 10 year fixed and it originally had a 3 year PPP (we have had it for 1.5 yrs).



She also said that this may change at any time being that laws change all the time (which I dont necessarily agree with). Even though this is good news for me, I asked her what law that was and she had no idea. I called around our great state hud centers and other state consumer mortgage websites, and no one knows of such a law.



Now I am scared that if I sell my home, they will stick me with the PPP. I asked the rep to get me something in writing, and she said the only thing she could print was a payoff request which reflects no PPP.



IF this is true, I would like to know when this law was enacted, because I paid a hefty $9000 PPP when I sold last my home 1.5 years ago. I should get that back if this was law back then.





One more question.... I thought I heard that conforming loans were now up to $700 something thousand. What ever happened to that? I called 2 mortgage guys and they said that it is $400 something thousand now. Any Ideas?

 

[Bubblegum_IHB]

I have no idea about the PPP, maybe Master or Maestro will chime in. The conforming loans are at $417K or so, and the Jumbo Conforming is in the 700's. The jumbo conforming allows freddie and fannie to up their limits to help ease the credit crunch. It appears that mortgages beyond the jumbo conforming are more difficult to secure.

 

[Bubblegum_IHB]

I have no idea about the PPP, maybe Master or Maestro will chime in. The conforming loans are at $417K or so, and the Jumbo Conforming is in the 700's. The jumbo conforming allows freddie and fannie to up their limits to help ease the credit crunch. It appears that mortgages beyond the jumbo conforming are more difficult to secure.

 

[lendingmaestro_IHB]

That's Jibber-Jabber. The person whom you were speaking with is very uninformed. She is probably trying to offer you a conforming loan or an FHA loan, neither of which have prepayment penalties. There is no such law in California, yet. Prepayment penalties are assigned by private investment firms like Lehman Bros, Deutsche Bank, etc. because one of the main risks to investors of CMO's is prepayment risk.