Foreclosure Payoff And Prepayment Penalty
Maybe this is state specific - but if there is a prepayment penalty, can the foreclosing lender still quote a prepayment penalty in a payoff for a loan that is in foreclosure?
When working my numbers, I am sometimes surprised that there is a prepayment penalty in the payoff when the loan is in foreclosure. Most times there is not the prepayment penalty.
Brenda
Hi Brenda... In Florida, the judge usually does not allow the Prepayment Penalty as part of the judgment amount.
If you get a Quit Claim or Warranty Deed from the seller, you can pay off the judgment amount at the courthouse, plus a few buck for post-judgment expenses....thus avoiding the Prepayment Penalty.
If you payoff the loan directly to the lender, they usually (always?) add in everything possible, including Prepayment Penalty, deferred interest and many other charges the judge would not allow in the judgment.
The key is, if you want a minimum payoff, arrange your financing outside this deal and payoff at the courthouse. Otherwise you are at the mercy of the lender. Hope this helps.
[addsig]
To payoff at the court house, I would have to wait for the Summary Final Judgement? I did not know that you could pay off at the courthouse. Although usually, I do just reinstate the loan, this is good to know. So could you go to the courthouse and pay it off the day before the auction? I have paid off to the foreclosing attorney close to the auction date and sweated it out hoping that the auction is cancelled. Seems safer to pay at the court house if you are close to the auction date.
thanks
brenda