Homeowners going after the big banks for what they call abusive mortgage prepayment penalties
Some Montreal-area homeowners are requesting a class action lawsuit against the country's major banks for what they call abusive mortgage prepayment charges.
Lawyer Joey Zukran said when his client Avraham Brook sold his house, Brook had to fork over nearly $30,000 in fees because his contract said that if he had to pay off his mortgage early, he'd have to pay a mortgage prepayment penalty - either three months interest or an Interest Rate Differential (IRD), what he calls a complicated formula.
"It ends up being an amount substantially higher than the three months of interest. In the case of Mr. Brook, it was 500% more. We are in the opinion that these fees are abusive," said Zukran in an interview with CJAD 800 News.
Zukran said even if it was there in black and white or explained by the bank,
"According to the law, it's not good enough because the only amount of penalty they can charge is the loss they suffer," said Zukran.
A hearing to try to get the greenlight for the class action against the 11 banks is expected in the next few months.