First Capital Mortgage / Option Arm / Washington Mutual

First Capital Mortgage/Washington Mutual in Chicago, Illinois. We did a refinance in December 05, which came with a prepayment penalty. The loan was done through a broker and the lender is Washington Mutual. We were told that if we refinanced through Washington Mutual, we would not have to pay the prepayment penalty. Another problem with this Option Arm is that it adjusts monthly and now we can't afford our payments. We were told this was a 3 year ARM and it would reset annually. Now we know that the minimum payment will adjust annually, the the payments adjust monthly. So we contacted Washington Mutual about refinancing. We were told that we have to pay the prepayment penalty if we refinance through Washington Mutual or any other lender. Washington Mutual said they could not refinance us because our loan balance plus the prepayment penalty would take our mortgage over the 90 to 95% LTV and therefore, could not refinance us. I spoke with another loan officer at Washington Mutual and he is suggesting that if the refinance is approved, we would have to pay $9600 out of our pocket for closing cost and prepaid items. Our prepayment penalty is $11415, so basically, we are paying that out of our pockets and we don't have that type of cash.

Comment On This

I myself live in Chicagoland and in 2006 I refinanced through Washington Mutual and I was told by their Loan officer at closing that even if it says pre payment penalty as long as I use them I would not have to pay that pre payment penalty. He also disclosed this loan as interest only. But a few months after closing I realized that it is a neg am loan and I am reeling. I have added 6000 to my principal and because I couldn't refinance because of the prepayment penalty I had to stick with a bad loan. Prices are falling and I am adding to my pricipal and it is just impossible for me to pay the interest only payment. I feel like I am trapped in a nightmare. The loan officer who did my loan was let go due personal misconduct. Now I can not refinance and my only hope is that they can work with me. This is my first condo and I am wavering on losing my home because Washington Mutual was dishonest. There are lots of people in this predicament and I wonder if there is help in sight.