Price improvement with Prepayment Penalty for Carrington Flexible Advantage & Investor Advantage transactions

Overview

Beginning Thursday, January 17, 2019, Carrington Mortgage Services, LLC (CMS) will permit prepayment penalties to be charged on Investor Advantage, Carrington Flexible Advantage and Carrington Flexible Advantage Plus non-owner-occupied, investment property loan transactions. Prepayment penalties may only be charged when permissible by State law. The prepayment term may be three years, two years, one year or no prepay.

Pricing Prepayment Penalty Options

The Base Price is improved to reflect the three-year Prepayment Penalty.
Borrowers can opt for a two-year, one-year, or Buy Out the Prepayment Penalty by adjusting the price as shown on the Rate Sheet.

State Restrictions

Prepayment Penalties are prohibited in Alaska, Delaware, Illinois, North Carolina, New Jersey, Vermont, Virginia, West Virginia and Wisconsin.

Disclosure Requirements

The following disclosure requirements apply to loans with a prepayment penalty:

• A Business Purpose Affidavit must be executed at Closing.
• State Specific Disclosures - two Prepayment Penalty Disclosures have been developed.
  • State Specific Prepayment Disclosure for use in Colorado, Idaho, Minnesota, Montana, Rhode Island and Wyoming.
  • Multistate Prepayment Disclosure for use in the remaining states.
• If a prepayment penalty is added after a Closing Disclosure (CD) has been issued a new three (3) day waiting period will apply.

State Specific Requirements

Resources

Refer to the Investor Advantage Program and Carrington Flexible Advantage Program guidelines and matrices for the applicable prepayment penalty requirements.