There are incentives for consumers to buy homes. There are programs for those in trouble to modify their loan terms. What about tossing a bone to those borrowers who have never missed a payment but also could use a break? For example, I was recently contacted by a couple who are three years into an interest-only, adjustable-rate mortgage (ARM) that has its interest rate fixed for the first 10 years. The loan carries a prepayment penalty if the couple were to refinance the loan within the first five years of its term.The prepayment addendum, known in the loan industry as a "soft" prepay because no penalty is assessed if the couple sells the home, stipulates that a refinance could cost an amount equal to six months of interest payments. While the couple (let's call them Couple No. 1) understood the agreement when they signed it, they did not anticipate other borrowers with inferior credit and poor payment histories (let's call them couple No. 2) getting a better de...
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