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.
“Today I am calling on Countrywide, as our nation’s largest lender, to bury its bad business practices and reverse some of the damage it has already inflicted on our housing market,” Schumer said.”
Schumer asked the nation’s largest lender to stop charging “above-market fees” that he felt took advantage of unknowing borrowers.
He also felt Countrywide was pushing brokers to put homeowners into risky loan programs by offering higher associated commissions.
“Startling reports have shed light on how Countrywide has led the industry in the practice of steering borrowers into risky subprime loans,” said Schumer.
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 interest rates, and homeowners should be aware of the implications upon signing loan documents.