MORTGAGE DISCHARGE PENALTIES

Be very careful when you are considering listing your home for sale.  Standard mortgage clauses allow you to port a mortgage from one property to another with certain underwriting requirements.  The current global economy has the banks and other mortgage lenders intensifying their underwriting criteria.  I had a self employed individual recently who the bank refused to port his mortgage to a property which he was considering to purchase on the sale of his current home.  To make this dilemma even worse was that the bank was going to charge this Seller a $21,000.00 discharge penalty on the current mortgage upon the sale of his current home.  Standard discharge penalties are the greater of three months payments of the mortgage +/- OR an interest adjustment till the end of the current mortgage term versus current interest posted rates.  So this individual could not port his mortgage and was exposed to a $21,000.00 mortgage discharge fee on the same mortgage …. really!


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